I just heard that lease / options are illegal in Texas.
Has anyone else heard of that?
Apparenelty lease/purchases are not: (IE: http://www.leasingtobuy.com)
Your help is appreciated.
Thanks!
For those in Texas, the only way you can use a lease option is if you own the property free and clear. However, this is how to do a lease option legally in your state. You can still get all the benefits of a lease option without worrying about the DOSC or a disguised sale or equitable interest, by using a land trust to get the same results:
The property is placed into a Trust with the understanding that, at the end of the Agreement, the property will be sold to the Resident Co-Beneficiary at Fair Market Value, minus any and all sums owed to the Resident Co-Beneficiary. Verbiage is such that there is actually no “Option” per se; and that there is no “bargain buy-out” provision other than “…at Fair Market Value, less amounts due the respective beneficiaries.”
You get the same thing as a lease option without the pitfalls, and with asset protection and privacy.
Hope this helps.
Da Wiz
Look up Texas Senate Bill 629.
http://www.capitol.state.tx.us/tlo/79r/billtext/SB00629E.HTM
Became effective I think Feb of 2006.
You can still do a lease/option just once on a property for 179 days in Texas. I am seeing many investors do a six month lease option and then converting them to an owner finance. Few investors have the relationship with lenders to do a straight-up seller financing due to the “due on sale” clause, but they are out there. Another option that I am seeing is doing a wrap deed of trust. There are ways to do it, but the length of paperwork increases dramatically.
Lee Warren