Posted by JPiper on November 30, 1998 at 15:15:04:
Just a few thoughts on selling the idea of the performance mortgage.
Most of the ?performance mortgages? I have written in the past have primarily had to do with unrecorded AITD?s, not lease/options. I have had no difficulty at all with the concept here. It was presented as one more item in the paperwork that needed to be signed, along with deeds which were to be held by an independent party, and the deed of trust. The ?performance mortgage? was presented assumptively?.in other words, this is the way it?s always done.
I haven?t done as many lease/options as a buyer, and the problems presented with this type of transaction are somewhat different. Again, however, the tact I have taken is assumptive. It?s just the way things are done. I don?t answer objections unless the objections come up. But what I have found is that the objections I have received are objections that can be handled.
Here?s one objection. ?If you don?t exercise your option, or otherwise perform your agreement, this performance mortgage is a problem.? Solution: As the optionee you execute a release to this performance mortgage which is held by the independent escrow agent along with instructions as to when this release should be recorded.
Another objection. ?I might want to refinance my property, but this performance mortgage will inhibit that process?. Solution: Insert a subordination clause in the performance mortgage in which you agree to subordinate to a new first up to a presestablished limit which does not affect your interest.
I know these are not all of the possible objections. But what I have found is that a careful questioning of the optionor?s objection reveals a problem with one of the above. Again, I don?t bring these solutions up unless the optionor brings them up first. The assumptive technique has worked well for me.