Running into problem, need help! - Posted by Eric

Posted by jeff on July 12, 2002 at 19:11:26:

OK, i have a question.

since you are just using that as a template and nothing else, what are you stating your agreement to be iof not the purchase and sales thjat is in that agreement in its current condition? are you stating it to be an option to purchase? i can see this option to purchase to not violate the DOSC if this is ho its drawn up. an option to purchase is not a violation if there is no lease attached to it. if you are just simply recording your option and not your lease, i can see this working. is this how you do it?

ni its current condition, i myself wouldnt use it for my recordnig. if you change it to a simple option and nothing else, then your good to go. or are you just stating that there is an agreement PERIOD. if this is it, i dont see this as ebing much of a cloud since there are multiple agreements that wont cloud a title.

Running into problem, need help! - Posted by Eric

Posted by Eric on July 12, 2002 at 17:11:31:

I have a property that I have lease optioned from a woman. I found a buyer who is qualifying for an FHA mortgage with 100% financing. His broker says it is a lock in 45 days. One problem is that he wants me to pay for an appraisal and closing costs, which I said no to, and I explained that I could just lease option it and not have to deal with it. Another problem is that he wants to go by and talk to the property owner, and I have a feeling that he is going to try something sneaky. Another thing about that is that I don’t want any waves and I have a feeling that he is going to discuss the price with the owner also. Is there anything I should do to protect myself? Like maybe have her sign a Sales agreement? The actual lease option states that I can sell it outright, so it should hold up at settlement. Also, he wants to sign a sales agreement for 45 days contingent upon the mortgage approval. Can he screw me and go directly to her to try to buy from her??? The last thing is that they have to get an FHA appraisal and what if the value is below what I am asking, that means that I am pretty much screwed right? Please any advice as to the process and as to how you would handle this.

Re: Running into problem, need help! - Posted by David Krulac

Posted by David Krulac on July 12, 2002 at 19:31:11:

Eric,

As long as you have an iron clad signed agreement with the seller you should be ok. In general you never want buyers and sellers to ever be together in the same vicinity. i thought i saw your ads in the daily. continued sucess.

David Krulac
Central Pennsylvania

Re: Running into problem, need help! - Posted by Joe

Posted by Joe on July 12, 2002 at 17:45:30:

In addition to what jeff said, you could record an “affidavit and memorandum of agreement”. This places a cloud on the title, and only needs to be signed by you (and notarized). This is if you’re concerned they will try to go around you. you can find the form for free at legalwiz.com. I’ve used it, and it made me feel more secure.

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 12, 2002 at 17:31:43:

your L/O is probably not recordable, read the contract and find out for sure but most of them are not becasue of the DOSC violation that causes, but you need to make it known that yuo have an exclusive option on the property and that it can not be resold by the owner until you either violate your end of the lease or you fail to exercise during your exercise period.

be certain that the owner and the buyer are positive that this does not leave any room for them to negotiate you out of the deal. if they continue around you have your attorney contatct the owner and inform her that she is in breach of contract and that she can be sued AND that her L/O with you violates her DOSC with the lender and that could bring her into foreclosure proceedings. this is just a threat for the most part, but it may be enough to scare her.

the appraisal may hurt your profit, but it wont kill the deal unless your not flexible enuogh to work aruond it. try a second mortgage for the remainder or just an unsecured promissory note if you have to as a last resort. you could even get a promissory note with security from a car or something if yuo desire.

if nothing else works mayeb just lower your purchase price to meet the appraisal and take the loss if there is still some profit involved. less profit may not be desirable, but its better than having to hold the property for another year waiting for a buyer.

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 12, 2002 at 17:56:58:

id be careful recordnig an affidavit here, that would depend on the DOSC of the orignal lender if their is one. this affidavit will violate that clause and cause the owner to go into foreclosure if the lender desires. this will cost you your house and cost your owner their credit. if there is not a chance of a DOSC violation then record away, just know the circumstances beforehand.

Re: Running into problem, need help! - Posted by Joe

Posted by Joe on July 12, 2002 at 18:03:24:

How do you figure recording a memorandum of agreement is a violation of the DOS clause? Read the memorandum, and tell me what part of the Garn act applies.

Nope.

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 12, 2002 at 18:09:21:

i havent read the memorandum you are referring to, but the ones i have seen say something to the effect of having a purchase agreement or other purchase option recorded against the title. is this correct on your agreement?

this option that you and your seller have together is a direct violation of the garn-st germaine act in the clasue that states the lease of 3 years or less that doesnt contain an option to buy. your option to buy is the violation. if your memorandum doesnt have this statement, then i apologize, but most of them do or else there would be no cloud to clear up, just a sheet of paper stating that you are signed to a sheet of paper with the seller’s name on it also. if it doesnt include references to your agreement, where is the cloud?

Re: Running into problem, need help! - Posted by Joe

Posted by Joe on July 12, 2002 at 18:21:22:

It simply states that there is an agreement between the two parties, not what’s in the agreement. It could be an agreement to sell the property ten years from now, for all anyone knows. The actual agreement is not recorded, it’s secret. This still clouds the title. It gives public notice that an unrecorded agreement exists, and title companies would need to rectify it to assure clear title. There’s the cloud.

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 12, 2002 at 18:33:06:

i just read your memorandum and i still dont like it. maybe its legal and all, but i still wouldnt feel easy about using it.

this document states the purcahse date, it also states that there is a purchase and sales agreement between you and the seller, there is no purchase and sales agreement between you two actually. there is only an option to purchase. a purchase and sales agreement is binding to both parties unlike your option. i dont think ill be recordnig a document that states anythnig other than the facts. if the facts are not announced to the public i dont mind donig weird things like the L/O, but once they hit the public eye, i get skiddish about the entire deal.

does anyone know if your allowed to record a document stating anything other than the facts?

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 12, 2002 at 18:26:31:

if there is no mention of your L/O then you should be OK as far as the DOSC is concerned. most of the memorandums i have seen contain a reference to the agreement itself.

i guess i need to go check out that memorandum and see if itll solve that problem huh? maybe ill start using that also. LOL

Re: Running into problem, need help! - Posted by Rey

Posted by Rey on July 13, 2002 at 11:22:31:

what does that (NT) stand for?

Re: Running into problem, need help! - Posted by Joe

Posted by Joe on July 12, 2002 at 18:38:56:

Whatever, jeff. You modify it to fit your particular needs. There’s no legal requirement to list any dates for closing, nor any requirement to list it as a "purchase and sales’ agreement. It’s a template for Pete’s sake.

Forget it. You’re convincing yourself not to use a helpful tool used every day for exactly what you’re trying to do. So be it. Sheesh.

record a performance mortgage? - Posted by Winston, CT

Posted by Winston, CT on July 13, 2002 at 12:01:48:

Seems like what you are all refering to is a performance mortage. I have never done one,so don’t ask me for details! I am sure someone here will elaborate.

Re: Running into problem, need help! - Posted by jeff

Posted by jeff on July 13, 2002 at 11:25:46:

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