Posted by Russ Sims on October 20, 2003 at 13:11:49:
If you lease/option a home that is encumbered by a mortgage you are violating the DOS clause. Because the DOS clause states that if you transfer ownership or “interest” the maortgage holder can, at their discretion, call the loan due. Giving someone an option on a home is giving them interest in the home, hence the violation. In reality as long as the mortgage payments are made on time and no one takes any pains to notify the bank of a transfer in interest, the DOS clause won’t be envoked or enforced.
If you are lease/optioning a home from a seller you must, absolutly must make the mortgage payments yourself, or at the very least have an escrow company make them. Don’t trust a seller to make them because that’s a path to disaster.
A wrap mortgage is a violation of the DOS clause. As with lease/options the DOS won’t be an issue if the bank never knows of the transaction and payments are maintained.