lease/purchase question - Posted by Rob

Real Estate Investing
#1

Posted by Jim IL on January 26, 2001 at 04:51:58:

Jim,
Nope, not in my opinion, which is based on my experience with a few deals.
Think of it this way.
Do you really think the person at the lender who recieves that check sent to them and enters it into the computer is the same person who makes the decisions about calling loans due?
NO WAY!
Do you think that person is trained to look for checks from someone other than the person on the note?
Again, NOPE!
That person is probably a data entry clerk, and they don;t care who the check is from.
Likewise with the rest of the employees at the lender.
Besides, is the fact that the payment sent in is coming from someone other than the person on the note a sign that the D.O.S. clause has been violated?
Nope!
Could be a relative, and accountant, a financial advisor or any number of other people.

Bottom line is lenders care about whether or not the payments are made, not by who.

Hope this helps,
Jim IL

#2

lease/purchase question - Posted by Rob

Posted by Rob on January 25, 2001 at 20:58:21:

We are new to this and have a question about a potential problem with the lease/purchase agreement, If we sublease and the original seller defaults with his mortgage company
(i.e. doesnt make the payments) How does that affect us and our buyer/tenant? Do we have any recourse?
Any suggestions to keep this from happening?

#3

4th and 5th options - Posted by Bud Branstetter

Posted by Bud Branstetter on January 26, 2001 at 10:22:21:

I’m all for making sure the payment is made but the underlying problem is the same. You don’t have control. With a performance mortgage if you found out about it you could foreclose. However, in many states the first does not have to notify a junior lien holder of the foreclosure.

Not to keep harping on it but the best way to protect yourself is to do a PACtrust. The seller, you and the buyer are all protected. Yes it costs a little money but what doesn’t for security and peace of mind.

#4

Re: lease/purchase question - Posted by Ron-Va

Posted by Ron-Va on January 25, 2001 at 22:13:59:

In addition to what William said you can make the check out dicectly to the mortgage company. Most of the ones I do I pay the amount of the mortgae only and if they are not comfortable with me making the payments directly to the mortgage co. (which is what I shoot for) I will send the check to them but made out to the mortgage co. only not to them.

So there are 3 options for you.
1-Have third party service as William suggested
2-Pay direct to Mortgage co.
3-Pay to seller but check made out to mortgage co.

In my humble but most accurate opinion :slight_smile:

Good Luck,
Ron

#5

Re: lease/purchase question - Posted by WilliamGA

Posted by WilliamGA on January 25, 2001 at 21:57:08:

Rob,

That is a very real possibility.

The best way to avoid it is for you to pay the mortgage for the seller or use a third party servicing company. They will collect the pmt from you each month and pay the seller’s mgt. as well as forward any balance due to the seller to him.

#6

Re: lease/purchase question - Posted by Jim C

Posted by Jim C on January 26, 2001 at 01:54:27:

But if you do it that way, would it be more likely to trigger the Due On Sale Clause? Wouldn’t it be easier for the Mortgage Company to find out?

Thanks!

#7

Re: lease/purchase question - Posted by Matt B

Posted by Matt B on January 26, 2001 at 12:07:44:

I absolutely agree with Jim. I have had sellers call the bank and tell them to send the statement to me. I then paid the mortgage out of my corporate account. Never once did ANY bank flinch at that or question it.