L/O legal problems??? - Posted by DB(WI)

Posted by JHyre in Ohio on March 11, 1999 at 14:34:01:

I dunno much about the first two portions. I do know a bit about tax law. The chance of most L/O’s (i.e.- those that are well drafted) being reclassed as financing/sale is VERY low. Simple fact of the matter is that the owner of the property still bears most of the risks and rewards of ownership. I could provide a dozen plus cases and rulings to prove my point, starting with the Supreme Court’s LYON decision. In fact, the thing that Reed most hates about L/O’s- that many go unexercised- is the best argument against reclassification. No exercise, no sale- that simple. I like alot of what that guy writes, but if he intends to become a lease-option tax advisor by night, he’d better keep his day job.

John Hyre

L/O legal problems??? - Posted by DB(WI)

Posted by DB(WI) on March 11, 1999 at 12:57:26:

Let me start by saying that I am not endorsing this person’s site. I am interested in L/Os and while searching for information came across John Reeds site which claims that lease options could have the following negative legal repercussions:

“Named in numerous laws and legal documents as triggering events”

“Trigger reassessment in CA” (anyone know about other states)

“Legal doctrine of substance over form . . . court . . will treat lease option as land-contract sales”

Interestingly, his site was the only one I found which noted these negatives. Even MSN has some good definitions and descriptions. If you do a search you can find the page, I don’t care to advertise for the guy. Although I have seen some of these topics covered, some I have not. Does anyone care to respond?