Posted by Tom-FL on December 06, 2004 at 18:58:08:
Don’t do it!
Lease Option to Seller Problems - Posted by Rob
Posted by Rob on December 01, 2004 at 24:10:43:
Is there a right way, with the right legal constructs and disclosures, to do preforeclosure purchases combined with sale leaseback w/ repurchase options to the sellers? I have heard of a lot of problems with this concept. Is there a way to do it while protecting the buyers rear end?
Re: Lease Option to Seller Problems - Posted by Frank
Posted by Frank on December 03, 2004 at 01:07:37:
I helped a seller out by reinstating a loan in April, I had them sign a warranty deed, quit claim, Due on Sale letter, a check list affirming their mental state to transact, a rental agreement and option to purchase in the presence of a notary at a title company office. The reinstatement amount was $50K, the seller offered $20K and I invested $30K. The loan amt was $265k. I gave him an option to buy back subject to the loan for $40K in 90 days and $50K in 6 months. I would gain $10k or $20k. They were grateful and happy because the plan would avoid the seller of loosing $90K in equity without my help. With my help they’d protect $80k or $70k depending when they exercise the option. The rent payment was supposed to be the mortgage payment plus $300 gain for me every month. They newer paid on time, they gave me bad checks 3 out of the last 7 months. They are now suing me and asking the court to declare the good warranty deed and Quit claim from my Step by Step guide to Land Trusts void and unenforceable because they allege that this was a dummy sale concealing a ‘loan’. Well they have made it appear usurious and want me to pay them 3 times what I invested as penalty and damages. I have retained a lawyer and this has the beginnings of a nasty christmas season coming up. I would appreciate any ideas for a defence. Rememember no good deed goes unpunished!
Re: Lease Option to Seller Problems - Posted by William Bronchick
Posted by William Bronchick on December 02, 2004 at 09:24:13:
Generally a bad idea. First, the seller in foreclosure will likely default
again. Second, if he finds a sympatheic lawyer, they will be all over
you.
Read this article:
Re: Lease Option to Seller Problems - Posted by Rob
Posted by Rob on December 04, 2004 at 08:25:11:
What state are you in? Are they claiming violation of State or Federal law? Did the land trust complicate the deal, since the title still has their ‘name’ on it (ie: ‘sally seller trust’)?
Re: Lease Option to Seller Problems - Posted by harold
Posted by harold on December 02, 2004 at 13:30:36:
Say you find a person in forclosure who has equity in the home, lets say they owe $70,000 and the house is worth $90,000. Say they owe 5k to stop forclosure, can you pay the 5k for them, then lease option the property for $70,000 and then sub-lease the property for $90,000 with 3-5k option money up front.
With these stipulations:
-That the person being forclosed upon move out.
-That they avoid a forclosure on their record.
If the option is exercised at the end of the year you pay off the $70,000 and collect $20,000.
Is this feasible?