Posted by Soraya on May 09, 2000 at 12:10:38:
Have YOUR attorney draw up a performance trust deed (or performance mortgage) for the seller to sign with these requirements. If seller does not do as he says, the tenant buyer (optionee) can foreclose.
Soraya
Tenant/Buyer wants security against Seller. - Posted by LeonNC
Posted by LeonNC on May 09, 2000 at 09:54:59:
I’ve found an interested t/b for a property that I was beginning to think would not sell. This is a beautiful house but has a driveway like a ski slope (functionally obsolete). I’ve lease optioned it from the seller with the intention of assigning it.
My prospective t/b says she would like some security against the owner in the event that the owner for some reason stops making payments. Probably not your average t/b. My agreement says that I/they can make up any payments if the owner stops making them. There is also an early payoff on the second mortgage that she says she would like some protection against incase she has to go down and get a loan herself. I am not sandwiching this one just assigning it. Is there anything I might be able to arrange to give her anymore security other than being able to make the payments? I think her main concern is the prepayment penalty of $3000.00. Thanks!
LeonNC
Re: Tenant/Buyer wants security against Seller. - Posted by JPiper
Posted by JPiper on May 09, 2000 at 12:47:23:
Leon:
Why isn’t your deal set up so that the payments are made to a third-party, who makes the underlying mortgage payment? Whether you are assigning or not this is simply prudent.
Recording a performance mortgage gives the tenant/buyer a way to enforce the agreement. I’m still trying to figure out why she’s worried about a $3K prepayment penalty…that’s a cost to the seller. Is this deal underwater to the point that it wouldn’t support a $3K prepayment penalty? If that’s the case, she simply needs to exercise AFTER the period for the pre-payment penalty, OR the seller will have to come to closing with cash (this is problemmatical). Even a performance mortgage can’t change the terms of the underlying loan(s). Just make sure your agreement extends beyond the time of the prepayment penalty UNLESS there is sufficient equity in the deal for the seller to pay $3K.