Underwater - Need Advice
I have a situation I would like you to consider. I have a property I moved out of 2.5 years ago. It is 600 miles from my home and I don't have any time to manage it. It has been empty for the whole time. I have had offers, but none of them have worked out. I now have a serious buyer, however, he is currently unable to obtain financing.
Here is my question/concern : I would love to carry the note myself and sell it to him outright. Unfortunately, this would trigger the Due On Sale Clause on my current mortgage. I am considering doing a lease option with him. What are your thoughts on this option?
I have very little equity in the property, since I refinanced it 2 years ago and paid off all of my debts with the money.
Can I structure a lease option to make the "buyer" responsible for repairs to the property?
Thanks in advance.
w35773,
Glad to meet you.
I really don't think you have anything to worry about as far as the DOS clause, in your case you could sell the property with a Contract for Deed (CFD).
Since the deed is not recorded with a CFD until the buyer lives up to the terms of the CFD then in essense the property has not tranferred out of your name. Thus no DOS clause violation.
The DOS is pretty much mis-understood anyway, but in your case I would think I would not lose any sleep over it.
Welcome on board this board, hope this helps in your decision.
John $Cash$ Locke
Thanks John,
What about a long term lease with an option with a sliding reduction in sale price. If you used an amortization table to reduce the selling price and gave a long term lease and option, it would be the same thing to my bank account as a sale, but without transferring title. Then when my mortgage is paid off, I transfer title and take a note for the balance.
Would this work, or am I missing something?
I have heard that if your lease with option gives equity then if the person doesn't pay, (and you have to evict) that you will have to foreclose on the person, rather than just evict him.
Of course, this may not be true in the state where your property resides, but just a thought...
Eviction/Foreclosure is not at the top of my concerns list. I just don't want my lender to call in the note under any circumstances. That would be a disaster for me.
Yes, it can be structured to have buyer be responsible for everything. The way this is set up will not trigger the DOSC. I would like to discuss this off line, if possible.
Stu Stanton