There have been many posts regarding this topic over the past several weeks and I have been the target of some rather heated posts accusing me of creating fear in newbies or young investors. My point is that “equitable interest” is very difficult to disprove for the seller who faces expensive foreclosure procedures in default situations. Bobo likes to point out that “equitable interest” never happens. Well, here is what his mentor, John Cash Locke had to say on the subject on another forum:
"Glad to meet you. A Lease/Option can be considered that the Tenant Buyer has “Equitable Title” in the property and a judicial foreclosure is required to remove the T/B, I have seen it happen so I know this for a fact. Even if you separate the lease from the option once the T/B says he has an option the judge can rule “Equitable Title”.
I always use a Land Contract and in over 500 deals never had to file for a judicial foreclosure to remove anyone from my properties that fell behind in payments, go figure."
John $Cash$ Locke
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So, if you are a Seller and you want to do a lease option, please know that it is not just Da Wiz who thinks you have much better and safer choices. Remember, a home is an asset and it is vital that you manage it properly. John likes to use land contracts, I favor land trusts. Whatever you choose, don’t take unnecessary chances. Good luck to all.
Da Wiz