Lease Options / Owner Financing vs. Tenant Buyer Bankruptcy - Posted by LC (IL)
Posted by LC (IL) on March 08, 2000 at 09:30:47:
I am currently learning all that I can about lease options and owner financing transactions. I am extremely interested in Bill Bronchick’s techniques as taught in his ‘Cash Cow’ course (which I hope to purchase soon).
It just occurred to me how ugly it could get if you positioned yourself in the middle on lease options and your tenant buyer has established ‘equitable interest’ in the property and s/he filed bankruptcy.
Or worse, you sell a property on contract (where you still owe a mortgage) to a buyer whom files bankruptcy. You, as a seller, are on the hook for the underlying mortgage and your buyer gets a forebearance. Obviously, if you don’t want to wreck your credit, you will need to carry the burden.
How do you protect yourself on such events? Do you make the seller sign a notarized document that states that this property could not be tied up in a bankruptcy?
As you may be able to tell, I am a newbie just learning the business. Interested in any and all replies.