In a lease option how can you protect yourself from entering into a contract whereby not knowing on the investor part, the property may have a lien on it, or placed on it during the duration of the contract.
If you’re into the deal long term via a sandwich lease, you can do a few things to protect your position.
First, have a title search run. You should also record a memorandum of your option and, for even stronger protection, a performance mortgage.
Finally, your paperwork should state that in the event there are some liens on the title that were not revealed or that occurred during the lease agreement, that these may be remedied by you at a cost of two dollars to one.
Hi,
Could you tell me what a " memorandum of your option" and a “performance mortgage” is? Thank you=)
These are documents that you would file with the local County against the property. Often referred to as clouding the title. Once on file, if anyone were to do a title search these documents would show up and prevent either a refinance or sale of the property. Thus, your position is protected.
Thank you, Our house burned down and we are leasing a house. We would like to lease option the house. The owner has agreed to $5000 with an option to buy.
Her mail still comes to this address and I have noticed that she has several past due statements for everything!
Is there anything I can do from my end, to ensure she is making her payments?
How far along is this deal? Have you already signed an agreement? Have you paid any option money?
As far as protecting yourself in this deal, that is a must. You shouldn’t take for granted that the homeowner is making her payments after receiving your’s. It wouldn’t be the first time a tenant/buyer was shafted.
In the interest of protecting yourself, as mentioned previously, at the very least you must record a memorandum of option with the county. Better still, if you can get her to sign a performance mortgage, use this instrument.
And you must make arrangements to be certain that the monthly payments are being made to the lender. Try and have the homeowner agree to allow you to make the payments directly. If she objects, a happy medium would be a third party escrow or title company. You pay them, and they disburse the funds as instructed. Don’t accept the homeowner’s word that they will make the payments as scheduled.
Thank you, Thank You, Thank you,
I have asked the question before, and did not get a good response.
Do you know of anyone that would purchase the property from her, and do a lease option…also be my lender for when the option is over?
The house is worth between $125 and $135k.
(I left you a message, but I though you were the Naked Investor=)
Where do you live?
How far along are you in the deal?
I’m in Austin, TX and we have not yet done anything. I asked the lender to run our numbers for a loan. Do you know of someone?
Her mail still comes to this address and I have noticed that she has several past due statements for everything!
first if she has several past due mail and you’ve already seen them you know that she is not a good l/o candidate to l/o from. as aj said it is not the first time that a t/b is gotten shafted.
due deligence, due deligence, due delingence, get out of your confort zone and protect your self.
good luck and God bless. 