Posted by MDonovan FL on April 07, 2000 at 10:12:26:
Nobody says that L/O’s are illegal. Its just that the lender has the option of calling the note due IF they find out that the property has been L/Oed. Bronchick says its highly unlikely they will find out, if handled correctly, while Gatten says that it is more likely than everyone thinks, especially when money gets tight. If you have the ability to replace the mortgage with new financing, it is not really an issue. Usually, the lender does not want a foreclosure any more than you do.
Why is Bill Gatten saying that a Lease Option is a “Masked” seller carryback and technically bogus on his website?. I want to do Lease Options but I want to be sure they are Legal!
Bill Bronchick says it’s legal and safe as long as I use his Lease & Option Agreements.
Bill Gatten says that Lease Options are Bogus.
Both say Land Trusts are great!
Who’s right and who’s wrong?
Is a Land Trust the way to go instead of the Lease Option? Please Help!!!
Re: Bill Gatten vs Bill Bronchick - Posted by Bill Gatten
Posted by Bill Gatten on April 10, 2000 at 15:05:33:
Never said it!
I have Lease Optioned properties myself, and I do not think they are bogus at all. I feel there is a better way, but they certainly are not “bogus” (a resident beneficiary in a land trust can be given the right to purchase at FMV less any moneys owed thereto by the trust at its termination…'avoids the need for an option).
The site you are referring to has an article written 3-4 years ago entitled “Bogus Lease Options.” But the article has nothing to do with whether lease options are bogus or not…it just talks about those that are: e.g., Lease Options that are written in the form of Purchase Agreements, which can cause REAL problems at times. Not that my name should be used in parallel with his (he’s an attorney…I’m not), but he and I both urge anyone using L/O’s to do the lease and the option in separate documents, so as to avoid the “bogus” aspect that Stralka discusses in his article. I only go a step or two further and suggest that the option be done away with in favor of a buy-out arrangement at FMV, less profits.
Please do not suggest that I have said anything about Lease Option not being legal (I’m in enough trouble here already). And don’t think that I have said that a Lease Option will cause a loan to be called. My position has always been this: If money gets tight and the tax, insurance or P&I payments are late on a continuing basis, and the lender would like to avoid the lengthy processes involved with judicial foreclosure, eviction, ejectment, quite title, Unlawful Detainer…or whatever…etc., etc. they can use the lease option as their justification for foreclosure just because of the existence of the option is technically a valid reason for foreclosure pursuant to the provisions of the the Garn St. Germain Act (12USC 1701).