Sandwich Lease Options
thru the readings that i have done on several websites i am getting the understanding that when you are the person getting the lease you should sign a lease/option but when you are the person doing the lease with a tenant/buyer you should have them sign a separate contract for the lease and the option.
how does this help, does this protect me the person who is offering the lease in some way and if so how?
Quote:
On 2003-09-04 22:53, chaynes wrote:
thru the readings that i have done on several websites i am getting the understanding that when you are the person getting the lease you should sign a lease/option but when you are the person doing the lease with a tenant/buyer you should have them sign a separate contract for the lease and the option.
how does this help, does this protect me the person who is offering the lease in some way and if so how?
When you are buying on lease option you want every advantage. A single form gives you, in the eyes of most courtrooms, what's called an equitable interest in the home, making eviction tougher, and foreclosure a more real option for the seller. A foreclosure takes longer and is more expensive than an eviction. However when you are "selling" via L/O you want the favorable conditions to be in your, the sellers, favor. Thus the separate agreements, lessening the likelyhood of an equitable interest arguement.
[addsig]
well this sorta leads me to another question. there are alot of investors that are using performing mortgages with lease options. would you record a performing mortgage if you have the tenant signing on 2 separate contracts? Or are you giving the tenant an equitable interest and enforcing this interest with the performing mortgage?
Yes, I know...I dug this one up from the archives.
Can someone explain performance mortgages to me , their purpose, and when they should apply to L/Os?
Thanks,
Nate
A mortgage is usually associated with a loan, but a mortgage can be used to secure any agreement. A PM is a mortgage that the Seller gives you to secure the Contract you have with him. It gives you more security and also allows you to be paid as a lienholder at closing. Of course, not every Seller is going to give you a mortgage on a Lease Option.
[addsig]
Just my opinion, but I would not expect a buyer to even order a home inspection for a property they have been living in for the last two years.
I would think that by the time the tenant is ready to exercise this option to purchase, he has already discovered everything that could be wrong with the property and already had you fix it as part of your landlord responsibility.
I just had my 1st option offer. The client wanted to do an inspection 6mos. after moving in; the lease was to be for 2 years. I thought that was strange timing and felt uncomfortable as a landlord w/that.
We decided inspection B4 moving in, or inspection After financing approval; their choice.
I agree w/kid, but not sure if you can control their choices. I know that we would not have negotiated at that point w/any pricing, it would have been for info. only.
newtree,
So I get this straight, you are advertising properties for sale using the lease-option method and you have no equitable interest in these properties? Is this correct...
Second question would be do you understand what a Bird Dog does and how he protects himself from being questioned by the Attorney Generals Office, Real Estate Division for Brokering without a license?
John $Cash$ Locke
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collecting a "lease-option fee" smacks of getting in trouble.
Back to the drawing board!!!!
hi John,
is having a letter of intent the same thing as having equitable interest to advertise a lease option?
Quote:
On 2008-06-10 17:26, JohnLocke wrote:
newtree,
So I get this straight, you are advertising properties for sale using the lease-option method and you have no equitable interest in these properties? Is this correct...
Second question would be do you understand what a Bird Dog does and how he protects himself from being questioned by the Attorney Generals Office, Real Estate Division for Brokering without a license?
John $Cash$ Locke
[addsig]
fullprice,
An LOI is a document outlining an agreement between two or more parties before the agreement is finalized.
Not sure if an LOI would stand up as an Equitable Interest document as the final agreement has not been completed. I personally would not use one and then try to explain that I had an Equitable Interest in a property.
Maybe Randall the LeaseOptionKing can step in and answer what the rules are when using the Lease Option Method.
What I do know if you are selling a property without an Equitable Interest in the property that would stand up in court, you are brokering without a license.
John $Cash$ Locke
[addsig]
I was told by my atty that a LOI does note create an equitble interest. Option, or signed contract is what she said.
A Letter of Intent is the intention to enter into an agreement. It sets out some of the salient points (not all) of a future contract.
Many letters of intent never go to contract.
A letter of intent does not establish ANY equitable interest in a property.