Posted by Stephen OR on February 29, 2000 at 17:43:56:
True, the Lease with Option to Buy does violate the DOS clause, but most people on the “Lessor” side of the contract never bring up actually “recording” a Lease Option. Why would you? You have nothing to gain be recording the Lease Option. Therefore, the lender would be hard pressed to learn anything had happended.
Stephen
LAND CONTRACT - Posted by John
Posted by John on February 28, 2000 at 12:17:08:
Excuse my ignorance, but I hope someone can help. I purchased a property @ approx. 80% market value with a new mortgage. My original plans were to rent the property out and collect a small monthly cash flow. After finding this site, and reading all the options available, I was was wondering if I can sell the property @ 100-110%, very little down, on a land contract with out paying off my original mortgage?
Thanks!
John
Re: LAND CONTRACT - Posted by Ed Copp
Posted by Ed Copp on February 28, 2000 at 14:31:42:
You sure can , and you probably will find that the L/C buyer will feel a lot more like it is his home. He will probably not ever call with problems, etc. You will no doubt like this arrangement…
Re: LAND CONTRACT - Posted by Dave
Posted by Dave on February 28, 2000 at 21:25:46:
If you want to sell and put out your equity, the Land Contract doesn’t make sense (unless you’re in a hurry).
If you want to rent without hassles, go with a Lease with a Purchase Option (2 separate contracts). Land Contracts can sometimes be difficult to foreclose on because the buyer has an “Equity Position” in the property. Any way, consult your attorney about which structure works best for you, and in your area.
Re: LAND CONTRACT - Posted by StephenOR
Posted by StephenOR on February 28, 2000 at 22:58:14:
The Lease Option arrangement makes more sense from a “Due On Sale” standpoint as well. If the lender finds out about the LSC, they may decide to call your note. With a Lease Option, you get to depreciate and write off the property. Then, if the Tenant can’t perform, you keep their option consideration and you’re out nothing.
Have You Checked… - Posted by Scott (AK)
Posted by Scott (AK) on February 28, 2000 at 23:46:07:
The garn St Germain Depositiory Institutions Act in reference to a Lease Option and the “Due on Sale” Clause?
It DOES violate the clause and the lender COULD call the loan due.
Having said that…structured properly, I am not sure how the lender would find out unless someone made a boo boo.
Just wanted to be sure everyone was “fully informed”
Scott