Posted by Johnh(NH) on January 05, 1999 at 09:11:38:
Bo, you’re close. File a Memorandom of Option. This puts a cloud on the title because you are stating you have a legal interest in the property (it will not trigger the DOS). Lenders will avoid/question using the property as collateral for a loan. In any case, if you have an iron-clad option on a property that is over-mortgaged, that’s the seller’s problem, not yours.
If you’re worried the seller can’t close because of sickness, death, etc, have him place the necessary documents and instructions in escrow, which will be processed when you exercise your option regardless of the seller’s current condition.