Getting Out Of Lease Option
I have purchased a property and put a tenant on a lease with an option to buy. Lease Option was recorded. In the contract it clearly states, that if tenant buyers misses payments for 90 days an Option will go away. Well, it's going to be 90 days in October. My dilema is, because Lease Option is recorded, according to Title company we would need to get cancellation from the tenant, to get a clear title. Since the tenant (former owner) is not expected to cooperate, what is the best way of removing Lease Option from Title.
1. Never let a T/B record.
2. Option should state that the act of recording renders the Option null and void and of no legal force and effect.
You could have gotten a Quit Claim signed and notarized upon Lease inception just in case. At this point, you will need an attorney to help clear Title. The wording of the Option will be very important. You may also have to sue the T/B.
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LeaseOptionKing,
Since the T/B is a former owner, I might have a Quit Claim from her, at the time of the purchase, how whould that help?
Thanks.
Just to clarify: we actually bought the property from another party who initially bought it from the homeowner in foreclosure.
The lease/option agreement was between him and the prior owner.
Does this change anything?
Thanks in advance,
Alexander.
So, the Quit Claim was from your T/B to the person you bought it from? How did you purchase it? Do you have a Warranty Deed? That would probably lessen the chance for you being accused of taking advantage of the former Owner. Still, you have the same problem--a cloud on the Title. I would say to consult an attormey. You could try to go ahead and evict and get a judgment and then use that as leverage to obtain a release of the cloud. Why haven't you already initiated an eviction proceeding, since it's been almost three months?
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Ah, yes, a Grant Deed. Didn't notice you were in CA. That complicates things further. CA has a very strict Foreclosure Law where the investor can't give the Seller any money for five days and has to let the Seller back out in that time. If your Seller didn't do that, it could fall back on www.you.Likewise, if you did not give your T/B the Disclosures required for a L/O in CA (or your Seller did not), an attorney could use these as a loophole against you. I would have found some violation of the Lease to use to evict them. Don't use an Option contract like that again. I make my T/B late after 5 pm on the 1st and invalidate the Option by 5 pm on the 5th. It is my understanding that it takes at least 60 days to evict in CA. :( Just consider this a learning experience and try to see the value in that.
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You can evict in CA with a 3-day notice for lack of payment. The 60 day is required to terminate tenancy without giving reason (assuming month to month tenancy is in effect) and if the tenant has been there for less than a year, you can evict with only 30 days notice.
Quickest and easiest fix here might be for you to sit down with a local title officer and see what he/she'd require in order to let you re-sell.
The title co. might be willing to "bond around" the option.
That would be a lot easier than going to get a new Judgment in Suit to Try Title, for which a lawyer would charge you substantially, and which could turn into a very nasty lawsuit.
I've found title officers to be very helpful on odd problems like this, and what often looks very complicated to us, does not look daunting to them.
Thanks for clarifying, edmeyer! I have only heard other people tell me about CA rental property. Glad to see some definitive information on that. Great idea about the title company, JM. That's something I would not have thought of.
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