I’m trying to organize my first deal and I need to find a good contract for a subject-to agreement with my pre-foreclosure owners. I need a CYA clause in case of title problems or in case they owe more than they say they do. I have an authorization to release the loan information, it’s pretty simple though, any cautions about that? Am I missing anything else? An agreement to vacate?
They are behind on their payments and I plan to get them current and get them enough cash to move into their other house. How should I arrange payment?
All you need is a simple Offer & Acceptance Agreement stating the terms of your deal. Fill out the form give them $10 dollars and thats it.
For instance if you put down the agreed upon price is $100K and you find that they owe $110K then there is no deal. If you find leins and encumbrances they failed to disclose to you then there is no deal so you are out ten bucks worse case senerio. You can put anything you want in the O & A, house to be inspected by a qualified inspector, etc., if these type of things concern you.
Never and I repeat never make up back payments or give the seller any money until they vacate the property and you have done your due diligence on the property and all the paperwork is signed.
Do not get in the ‘what if’ syndrome or you will ‘what if’ until you never get going in the great industry.
Don’t over complicate purchasing a property, your final paperwork needs to be State Specific and I highly suggest reviewed by good REI Attorney.
Since John took the Nike approach, I’m going to say you’re not ready yet. If you don’t know the answers to these questions, you shouldn’t be doing a Sub2 just yet.
In my opinion a Sub2 is an advanced method of acquiring properties to hold, regardless of what others may advocate. It sounds to me like you don’t yet have any landlording experience.
If the deal is too sweet to pass up (doubtful), then I’d suggest finding an attorney and doing a more traditional owner finance arrangement. In all likelihood you won’t find an attorney that will know the proper docs necessary to do a Sub2. You can find one fairly easily who will understand a regular owner finance situation.
And to repeat John’s comments and add a few, the payment goes straight to the lender or foreclosure attorneys, depending on their requirements and it happens AFTER the sellers vacated the house in agreed condition and it happens AFTER you have closed.