Posted by Jack on January 29, 2001 at 22:46:25:
You’re WELCOME! 
I know you two will do well Amy. I wish you much SUCCESS! —Jack
re: lease/purchase - Posted by Amy
Posted by Amy on January 23, 2001 at 17:36:37:
We are interested in getting started investing in real estate when we realized how many rental owners in this area are willing to sell by lease/purchase. As a matter of fact we are getting ready to easily refinance our house that is under l/p contract now, with no money down (and poor credit) simply because of the equity we will be able to show in it, over a very short period of time. Our question (and yes we’re getting a course…) is this: if we are not living in it, can it start as a lease/purchase with a sub-lease or do we need to do it as a contract for deed type deal? Any tips greatly appreciated as we get started. Thanks!
You do know this don’t you… - Posted by Jack
Posted by Jack on January 23, 2001 at 21:28:25:
That you have to have an agreement that permits you the right to sub-lease it.
And as a followup on the contract for deed. That’s a totally different method. Stay away from it if you can. It gives the least amount of protection. It’s also NOT an option to purchase. You would be contracting for the deed at a specified date. In the lease option to purchase, you have the option to either purchase, or not to do so. —Jack
Re: re: lease/purchase - Posted by Gary
Posted by Gary on January 23, 2001 at 21:23:24:
Perhaps it goes without saying, but be sure the lease portion of your lease/option agreement with the seller gives you the right to sublease…
Re: re: lease/purchase - Posted by Jack
Posted by Jack on January 23, 2001 at 21:12:33:
Hello Amy,
You don’t need a contract for deed. You’re on the right path — full steam ahead —Jack
Re: You do know this don’t you… - Posted by Amy
Posted by Amy on January 23, 2001 at 22:01:46:
Jack, stay away from contract for deed if I’m the seller or buyer or either? I was under the impression (and again we are just starting our studying) that it was “ok” for a buyer to buy that way?
Thanks Gary - Posted by Jack
Posted by Jack on January 23, 2001 at 21:32:09:
I almost forgot to ask if she was aware of that. You and I posted near the same time. Thanks for adding that anyway friend. —Jack
Re: re: lease/purchase - Posted by Amy
Posted by Amy on January 23, 2001 at 21:59:13:
Yes guys, sorry I meant to say IF it’s agreed we can sub-lease. LOTS to learn, reading & more reading, I’ll try to not ask too many dumb questions!
Let me clarify… - Posted by Jack
Posted by Jack on January 23, 2001 at 23:58:55:
Amy, here’s one of the reasons a BUYER should BEWARE of contract for deeds. It was posted on another newsgroup:
Need Foreclosure Info Now!
Posted by Charles Sneed on January 21, 2001 at 17:19:55:
“I purchased a home 4 months ago via contract for deed. I purchased the home for $97,500. I placed $12,000 down on the property, and have been making payments of $980 monthly. Today I received a letter from Texas Foreclosure Consultants, stating that my property is going to be foreclosed on Febuary 6, 2001. Do I have any options in this matter or will I just lose all my money? Also are there any mortagage companies that will re-finance someone who’s self-employed with bad credit? I can come up with a sizeable down-payment.”
This is what can happen if: (1) You don’t check for liens, judgments, and back taxes.
(2) You should record your contract for deed. Then if the seller applies for a loan on the property, the lender will discover your claim and deny the loan to the seller.
That’s the reason I warned you about this type of contract. They are okay if you cover all of your bases. But make certain you know the ins and outs before doing one of them as the buyer. Good luck! —Jack
Re: You do know this don’t you… - Posted by JohnBoy
Posted by JohnBoy on January 23, 2001 at 22:51:26:
It’s OK for YOU as the SELLER to SELL that way. OK for your buyer to buy from you that way.
You should also check your state laws pertaining to contract for deeds since every state has different laws pertaining to them.
Re: re: lease/purchase - Posted by Jack
Posted by Jack on January 23, 2001 at 23:26:08:
JohnBoy’s right Amy. And hey, from what I read in one of you posts, I’d bet you’re going to take the L/O’s by storm in your area.
Wishing you a TON of success! —Jack
Re: re: lease/purchase - Posted by JohnBoy
Posted by JohnBoy on January 23, 2001 at 22:52:24:
The ONLY dumb question is the one that you DON’T ask!
You’re right JohnBoy… - Posted by Jack
Posted by Jack on January 24, 2001 at 24:11:43:
In some states they require that the seller’s signature must be notarized or witnessed on the filing document before the contract for deed buyer can record it. I think that’s probably a protection for the seller against fraudulent claims on the property. —Jack
thanks guys - Posted by Amy
Posted by Amy on January 26, 2001 at 16:41:38:
How could I not do well with such excellent advice? I appreciate ALL of your time! We fully intend to give it our best shot and then some, the only thing that holds us back is knowledge! Then it’s only a matter of time, right? The thing that’s killing us now is not wanting to screw anything up, otherwise I’d already be on the phone trying to close some deals!!
Re: You’re right JohnBoy… - Posted by JohnBoy
Posted by JohnBoy on January 24, 2001 at 24:23:20:
One of the problems we have in IL. is that a seller can not prevent a buyer from recording their contract for deed. If you add any kind of a clause in the agreement that prohibits the buyer from recording the contract it’s null and void. So the way a seller gets around allowing a buyer to record their contract is to just not sign and have it notarized so the buyer wouldn’t be able to get it recorded.
Another thing you could do to add protection as a buyer is to require the seller to sign a performance mortgage to be recorded against the property to protect their interest. This way, the performance mortgage appears to look just like another mortgage recorded against the property should the lender ever check title instead of seeing a contract for deed recorded which would trigger the DOS clause. The buyer could use the performance mortgage to foreclose against the seller and it would prevent the seller from being able to get another loan against the property without your consent to subordinate your position to the new lender. It also puts you in front of any other liens the seller may cause to be recorded against the property.