Lease Optioning A Property To The Original Owner
Here is the situation…..
A man and wife are getting divorced. The man wants to stay in the house; she wants her half of the equity and to leave. The man can’t get a loan even though there is plenty of equity. I intend to buy the house, split the man’s existing equity (with the man) and take a half of future equity. In exchange, I will let the man remain, on a lease option basis.
I have the terms of this thing knocked out okay, but someone thought putting the original homeowner (though he was never on title, don’t ask me why) back in the house on a lease option might be considered usury. The man is begging me to do this for him, but I may not if it could result in trouble down the line.
This will be taking place in California. Any thoughts?
Thanks in advance for your thoughtful responses. Brian
Most likely you first instinct is correct, WHY put yourself in that situation. Is there a lot of equity you can get out of the property to warrant such a risk?
A couple of reasons:
His credit is bad, so his rate would be quite high.
At this point they are under a time line so they need to do this ASAP without any chance of a hold-up. If he attempts to buy her out and there is a delay past March 10, 2005 it triggers some clause in the court paperwork that neither one of them want.
As to the equity, yes there is roughly 25k up front and 50k when he eventually buys the property back from me.
By the way, have your dog call me. I have a great place for him in Havasu, it will be ready in a few months![ Edited by bnwbaron on Date 02/17/2005 ]