Lease Option--Equitable Interest--Question - Posted by Rick

Posted by Randy (SD) on March 21, 2006 at 13:10:43:

Here’s an Idea from a Boob…

Since you don’t indicate what state you are in and “equitable interest” seems to be a problem for YOU in lease option’s (not true in all states) why not buy on contract for deed (that gives you equitable interest) then sell on the lease option? You see when the CFD is recorded you are the owner of record and have a equitable interest… problem solved.

Lease Option–Equitable Interest–Question - Posted by Rick

Posted by Rick on March 21, 2006 at 09:04:25:

It seems that the equitable interest idea has been a problem for selling on lease option deals. Here’s an idea from a noob. If you had a clause in the contract something like—The legal concept of equitable interest has been explained to me and I understand it. I hereby waive my right to alter the terms of this lease option contract due to any aspect of the equitable interest concept. Would this help to avoid possible problems later? Just an idea!!!

Re: Lease Option–Equitable Interest–Question - Posted by Innovator

Posted by Innovator on March 23, 2006 at 04:02:00:

According to the Law, here are just 4 things that if any one of them takes place, will constitute a claim of equity.

  1. Pre-Determining a Purchase Price or Discounted Buy-Out
  2. Collecting an Option Deposit of more than 1.5 times the monthly rent, especially if it is used to reduce or be applied to a Purchase.
  3. Collecting or applying a Rent Credit toward a future purchase.
  4. A Tenant that has both a Lease and an Option on the same property regardless if they are separate documents.

Lease Purchases and Options are now being ruled as Delayed or Disguised Sales in the eyes of the law (check out NC and TX new laws as pertaining to L/O). If the law isn’t in your state yet, the laws in those states where they do exist will establish precedence if you get challenged by a good shark attorney.