Lease Option Vs Contract For Deed
If I finance a single family home through a bank, would it make more sense both from a paperwork aspect as well as from a simplicity aspect to us CFD to retail it to my buyer? Some have said that after a seasoning period, the tenant/buyer may be able to qualify for a refi as opposed to a full financing. This would save us both money at closing.
Now if I don't own the property, leasing with the right to sublease and option the property makes more sense......right??
Any comments appreciated.
Yes on both questions..you might also want to get a legal opinion from your attorney and learn a bit more on the L/O and CFD issues. Good luck. I would suggets reading a bit more on this site, as well.
Another thought occurred to me. If you are selling Contract for Deed, and you have a deadbeat tenant/buyer, do you evict or foreclose??
On the lease option side, I assume you'll evict.
Which is takes more time and money to complete? Thanks again for any comments.
Actually it could be either or in both cases.
CFD proceedings for removing a buyer will be determined by the contract and your state laws concerning CFD.
Under most conditions, a L/O would be an eviction, but again it will be determined by your contracts and the courts. In some instances, a judge at the eviction proceedings have ruled, due to the terms of the L/O contract, that the LO was a loan in disguise and thus, the landlord/seller must foreclose.
It's important to understand your states laws, or hire a competent attorney who does, when selling under terms.
Roger
CDF usually requires a forclosure since yuo are being the bank. The buyers up front money is considered a down payment, given them an equitable interest in the property. with a L/O you are being a landlord so you only do an eviction. Eviction= $50-100. forclosure=$2000- $5000.
sophiebear,
That's not true. A CFD requires whatever is written in the contract AND what your state laws require. Some states, a CFD contract must foreclose. Most however are left to the terms of the contract.
As most CFDs have a clause something to the effect of "if more than XX days late on payment, then contract is considered null and void," the buyer, by default becomes an unlawful tenant, and can, in most cases, be evicted as a normal tenant could.
However, most proactive investors will work with the tenant/buyer to make efforts to pay up the back payments or leave on good terms and never set foot in a courtroom.
Roger