Here is a interesting Lease Option - Posted by Bill

Posted by B.L.Renfrow on September 13, 2003 at 08:06:38:

You definitely want to carefully read the agreement to determine whether it would be violated by a lease option. If you’re still not sure, it would be worthwhile to have your attorney review it.

You are correct that a private note holder would be more likely than a bank to move to enforce a DOS violation. I had a similar experience in the past where a private note holder verbally agreed to me taking a property subject-to, then down the road developed “amnesia” and called the note due.

If you do talk to the note holder (which may or may not be necessary, depending upon the language in the contract) and if he agrees, be sure to get his agreement in writing.

Brian (NY)

Here is a interesting Lease Option - Posted by Bill

Posted by Bill on September 12, 2003 at 21:08:43:

I had a guy call me with a house that he is willing to do a lease purchase agreement. However, the house is owner financed from another party that has the house free and clear. I first asked the seller if I could assume the debt and take the house sub to. The seller said no because the origional owner or the deed of trust holder has stated that there will be NO ASSUMPTIONS and there is a due on sale clause in that deed. So next I asked for a lease purchase arrangment, which the seller said would be fine. I have not read the contract that this seller signed with the other party concerning the loan. I guess it could have a clause about not being able to rent the house out as well. Being a private person holding the note and not a major bank I would think the origional seller would be more likely to inforce a rental or deed transfer if it conflicts with their agreement. Oviously I will want to look at the agreement these 2 parties have with one another. Should I insist on talking to the first party that holds the note and test the waters to see if there is going to be a problem? Or should I just do the lease purchase deal?


Loan ballance is 105K
Seller wants 160K
House appraisal is 185K
Rent will give positive cash flow.
House is in good shape, frig and washer and dryer stays.

Re: Here is a interesting Lease Option - Posted by Craig

Posted by Craig on September 13, 2003 at 08:35:14:

The only way you can make this work is to talk with the note holder. Even if the note allows rental (I doubt it) he could take you to court over the option. and claim a l/o is a de facto sale. And he may win! I wouldn’t want to risk my money to that chance.

Find out what the note holder will do. Consider what would be in his best interest. If the current borrower is in some kind of trouble, the note holder may be willing to listen. Whatever the reason, it will have to be to the note holder’s advantge somehow. That potentially wipes out any deal, but I don’t think you have any other viable option.