Sale Contract For Paying Arrears???
Hi, all.
I'm a newbie at REI and trying to find the best way to acquire properties. I may keep and rent out if I get a phenominal deal in a nice area or flip for a quick profit. My question is this:
I've been looking into buying prop. that are facing TS. in So Cal. I know that these people are more motivated than NOD because they have no time to go through agents. I have a friend that deals strickly with TS prop. But she pays all cash for the prop (w/ investor's money) and it makes it very easy for her to obtain prop that way. I don't have any investor connection nor 200K+ cash to come up with. I was thinking if there was a way to draw up a contract with the seller stating that by paying their arrears I retain the right to purchase the prop. at an agreed upon price after the foreclosure status is wiped off thus giving me enough time to find conventional loan etc. I'm considering sub2 as well but it's a little hard to find sub2 deals in this hot SoCal market due to big jump in FMV. Of course, there must be some but I just prefer dealing with pre-foreclosures until I get some exper./prop. under my belt to build confidence.
I've been reading a lot in this and other forums and couldn't see anything that covers this aspect. Maybe I missed it? Also any recommendation from other So Cal investors about a REI lawyer that deals with pre-foreclosure/sub2?
Any insight will be greatly appreciated!
You can purchase the property paying the arrears, having the homeowners sign over the property and then continuing the payments on the mortgages. This is called Subject-To.
However, Please remember to check out Civil Code 1695. You need to give the homeowners a cooling off period and there is specific language that needs to be in the Purchase Agreement.
You don't need a REI lawyer, I guess you could use a title company if you really want someone to help you with the closing. But, there is no reason why you shouldn't be able to do this yourself.
Hope This Helps!
Mrs. Meltzer
Thanks for the advise, ****Must Reach Senior Investor status before posting URL's***.
About the sub2 suggestion, are you saying that I should start paying his mortgage until I could get my own financing since I'm interested in the property myself instead of selling to someone else? I wonder if there is a way to get the seller to pay two months morgage on his house. That should give me enough time to get financing. I'm not sure if the seller would go for it since he no longer has any interest in the property unless I back out which would be crazy since I'd have paid his arrears. Seems like the seller wouldn't have money to pay the mortgage anyway since he wouldn't be foreclosing if he had money. Any thoughts on that?
I want to find a way to secure the property until I could get it financed and get it off of seller's hands completely instead of seller having to risk his own credit. When I contacted one seller, this was his only concern. I'm thinking of a way to write up a purchase agreement that gives me the right to buy the property at a discount for paying arrears and getting them out of foreclosure.
As always, thanks for any advise.
They don't have enough money to pay the mortgage in the past, they won't have enough money to pay the mortgage 2 months in advance. It's silly to even ask. Don't be greedy.
Once you put money in to pay the arrears, you should make sure you OWN the property. Have the owners GIVE YOU THE DEED! If you don't have them SIGN IT OVER TO YOU first, they will let you PAY the arrears and then "change their mind" and decide not to sell. There will be nothing you can do.
OH, and get the people OUT that are currently living there. They cannot stay, it is illegal in CA.
Hope This Helps!
Mrs. Meltzer