Where Is The Seller After 2 Yrs?
If you buy on LO, how would you make sure the seller is around at the end of 1-2 yr term. What if he has moved out of town? Someone said stop sending him the payments and he will call you!
What if you were sending the mtg payments to lender directly (you got the prop for mtg balance and make the current mtg payments)?
Do you escrow the deed with your/ their attorney?
[ Edited by SKrei on Date 10/26/2006 ]
What if you got the property for mortgage balance; make payments directly to the lender; the lender did not have excrow for tax; you find out that seller has not paid the taxes? Maybe he will miss the next payment too?
The best way to make sure you get the deed from the seller on a L/O is to use an escrow agent and a performance mortgage. Basically, you have the seller sign all the documents needed to sell the house and then you put them in escrow. Then when you are ready to close all you have to do is find the escrow agent. If you fulfill your end of the deal the escrow agent will release the closing documents.
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Yes, Lease Purchase is a definite sale. If the buyer defaults, the penalty should be listed in the P&S. If any tenant damages property, they must be taken to court. A Lease Purchase gives the tenant/buyer an equity stake in the property. If they disappear, taking the property over is not as simple as a tenant who abandoned a property. You may have to foreclose.
If a tenant/buyer defaults on a L/O, many investors fear that the T/B will go to court claiming equity. It would be rare for them to succeed, however, it may tie you up in court longer. A judge may grant them equity if they put a lot of cash down or the property appreciated considerably during their tenancy (making their equity substantial).
I use L/O only. Screen your T/B’s. Sometimes you can tell if they are litigious by getting them to talk about their past. If you take away their rent credit for slightly late payments, or try to evict them the minute they are late, you are looking for trouble. Use an online tenant check service. If you put very bad people in, they will give you trouble.
L/O are not for the faint of heart. You must be strong but not nasty.
Yes, Lease Purchase is a definite sale. If the buyer defaults, the penalty should be listed in the P&S. If any tenant damages property, they must be taken to court. A Lease Purchase gives the tenant/buyer an equity stake in the property. If they disappear, taking the property over is not as simple as a tenant who abandoned a property. You may have to foreclose.
If a tenant/buyer defaults on a L/O, many investors fear that the T/B will go to court claiming equity. It would be rare for them to succeed, however, it may tie you up in court longer. A judge may grant them equity if they put a lot of cash down or the property appreciated considerably during their tenancy (making their equity substantial).
I use L/O only. Screen your T/B’s. Sometimes you can tell if they are litigious by getting them to talk about their past. If you take away their rent credit for slightly late payments, or try to evict them the minute they are late, you are looking for trouble. Use an online tenant check service. If you put very bad people in, they will give you trouble.
L/O are not for the faint of heart. You must be strong but not nasty.
Courts are scrutinizing the "liquidated damages clause" that used to be so commonly used (I have removed it from all my Contracts), especially as it relates to Leases, and the court will often ask the Landlord to PROVE actual damages. No alarms yet--just keep it out of Leases.
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