Posted by Keith on December 24, 1998 at 08:57:03:
Secure the performance of the option with a Deed of
Trust and you should be fine.
L/O in Texas - Posted by Marieta
Posted by Marieta on December 23, 1998 at 14:41:40:
I am studying Bill Bronchick’s lease options workshop materials and fully understand the concept for the escrow and performing mortgage. Last night I was also reading some older posts that I had printed.
In one of them, a fellow investor from Texas mentions that “…the deed that the owner will sign to a tenant/buyer and deliver to escrow would not probably be a good deed, unless the buyer is paying the remainder of the purchase price in cash. The problem is that, if buyer obtains the loan to fund the purchase, the lender’s attorney will have to prepare a “warranty deed with vendor’s lien”. This will tie the warranty deed to the deed of trust securing the lender’s note establishing the priority of the lien. It has a language naming the mortgage company issuing a loan, and referencing loan amount. It is impossible to know that information at the time you’d try to prepare that deed for your future buyer. So,the deed will have to be redone and resigned by the owner for the financing to occur, and if the owner is not there to sign it for any reason, the buyer won’t get the property.”
My question to the folks in Texas(or anybody else)is, how do you go around this? How do you protect yourself?
Thanks,
Marieta
P.S. Merry Christmas and Happy New Year!
Re: L/O in Texas - Posted by Alex Gurevich
Posted by Alex Gurevich on December 24, 1998 at 22:39:11:
Marieta,
Since I posted the response you were refering to, perhaps, I should also reply to this. (Keith’s advice is good too).
What you cite will not be applicable to your cituation. You will get a cash deed from the owner when your buyer excercises the option. Your buyer, not you, will get the loan; you will sign the deed with the language refered above, but your seller will sign the cash deed to you. Since it’ll be the simultaneous closing, the proceeds of your buyer’s loan will be cash, which you’ll turn to your seller; hence, cash general warranty deed without vendor’s lien language from seller to you. So, get it in advance.