Posted by bronchick on November 23, 1998 at 09:40:40:
In my “Lease/Options Workshop” and “Nuts & Bolts of Creative Real Estate Transactions,” I go into performance mortgages in detail.
Essentially, a mortgage is a security device to guarantee performance on a note. You don’t perform (pay) on the note and the lender (holder of the security instrument) forecloses.
A mortgage can be used to secure performance of any obligation that requires performance, even a lease or contract. Thus, a default on the underlying lease or contract permits the mortgage holder (you) to foreclose the lien. It also makes you a priority secured creditor (like other mortgage holders) in bankruptcy so you won’t get wiped out.
Need L/O bankruptsy clause; - Posted by JDenney (OH)
Posted by JDenney (OH) on November 20, 1998 at 04:44:24:
Does anyone have a clause I could insert in my lease / option contract with the seller to protect myself if he were to file bankruptsy? Would a clause be nessasary with new buyer on sandwich L/O ?
Re: Need L/O bankruptsy clause; - Posted by Bronchick
Posted by Bronchick on November 20, 1998 at 09:28:37:
An “anti-bankruptcy” clause is not enforceable. If you record a “performance” mortgage on the property at the onset of the lease, you will be a priority secured creditor in the BK proceeding.