Hi,
I’m looking to get a property on a lease2purchase contract, but I have one concern and wonder if you guys can help?
What happens if during the time of the lease-purchase period the owner defaults on the mortgage and the property is about to be foreclosed? What rights do I have? What can I do?
You pretty much have no rights and there isn’t much that you can do. The “seller” still owns the house.
I don’t recommend “buying” :
via lease option, but if you’re still considering, then you should at least do the following:
Have your own lease and option agreement. In this, you can put in something about possible foreclosure. Still doesn’t really help, but maybe you can sleep better at night.
Set up ALL bills with the property through a 3rd party company, a loan servicing company, an attorney, or cpa. And I mean all bills. Mortgage, taxes, insurance, etc. At the very least, set it up where YOU pay these bills and don’t leave it up to the owner/seller.
Have the seller escrow an executed deed with your attorney/title company as well as a limited power of attorney for that property. That way, if you are unable to find the owner when you are ready to actually buy, you will still be able to close.
Raj