Posted by Bud Branstetter on April 03, 1999 at 12:56:36:
When you do a lease option you have a future profit usually. As a way to insure that you make that profit you create a mortgage on that property. There are no payments, interest etc. If there are subsequent judgements on the owner of the property the mortgage can be used to clear title so the option can be exercised. If you have to put cash into the property(septic system, paint, carpet) it is also a way to protect those investments. If my tenant buyer flakes out I don’t want the owner to walk away with my improvements. But then again that is why L/O work best with property that does not need repair.