Re: Getting around title seasoning issues - Posted by JohnBoy
Posted by JohnBoy on January 07, 2001 at 19:56:34:
You could have the deed already signed by the seller and held in escrow the same as when buying on contract for deed.
When buying on contract for deed the buyer signs a “quit claim deed” and the seller signs a “deed” which are both held in escrow until the contract is paid in full. Once the contract is paid the escrow releases the deed to the buyer. Should the buyer default, escrow releases the quit claim deed to the seller to be recorded releasing the buyers interest in the property.
I suppose you could basically do the same thing with a L/O by having the seller sign over the deed up front and have that held in escrow with written instructions that the deed is to be released over to the buyer or buyers nominee once the option is exercised.
Usually the lender will want to see the purchase contract. In a case like this the contract would be between the middle man and the tenant. The tenant isn’t actually buying from the original seller, rather he’s buying from the middle man. So if title is going to be released from the seller to the tenant, isn’t this going to create a problem still inspite of the performance mortgage?
Why not just have the seller deed the property into a trust, then L/O from the trust. When the buyer exercises, the seller assigns beneficial interest of the trust over to you where you transfer title of the trust to your tenant? Seasoning of title has been taken care of by letting it season under the name of the trust.
Watch out, I know Bill Gaten is going to jump all over this response if he reads this! LOL