Re: Questions on Lease Options - Posted by Chris in FL
Posted by Chris in FL on March 16, 2006 at 13:18:54:
James, I will answer publicly, and I won’t kill you… Are you using lease/option to buy, or sell (because one of your questions pertains to buying, and the other to selling)?
Lease 2 purchase (meaning you are buying) - if you want to record it, thus making your interest in the property known, there is a chance the bank will decide to pursue DOS (reality is, the chances are probably slim they would call sellers note due). If you do something to mislead the bank (to avoid DOS), there is a good chance you are party to mortgage fraud. Beware.
Your next question was how to protect yourself from an equitable interest claim from a tenant/buyer. This indicates you are selling using a lease/option. Several factors, but this is a start… 1-Use a contract for option, not an actual option. 2-Your lease should never mention your contract for option. 3-Term should be less than three years. 4-Unlike when buying, when you sell you probably don’t want the contract recorded. 5-If tenant/buyer builds a certain amount of equity, they have an equitable interest regardless (and should have). 6-Lease/option rules, regulations, and treatment in court (should that be necessary) depend on local rules & regulations. More and more, states and localities are starting to crack down on investor’s using lease/options to sell because so many unethical investors have taken advantage of tenant/buyers. If you don’t know your stuff, you probably better get with someone that does before proceeding, or you might get in trouble. Good luck.