TEXAS INVESTOR'S !!! LEASE OPTION ALERT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! - Posted by Gene S Hou. Tex.

Posted by Gene S Hou. Tex. on January 30, 2000 at 22:17:36:

what is AIREO? Also who is Jeff Baron? Hang in there with me Bud. I’m a newbie. The Hou atty was NOT board certified. You said yours was bd cert & I could ask him. May I ask who he is! Also it sounds from your response that you have used a perf DOT before. If so, did you use an accompanying note. If you could expand on this I’d appreciate it. THANKS!

TEXAS INVESTOR’S !!! LEASE OPTION ALERT!!! - Posted by Gene S Hou. Tex.

Posted by Gene S Hou. Tex. on January 30, 2000 at 12:54:05:

I’m very interested in doing some sandwich l/o in Houston. I like Bill Bronchick’s way of using a Performance Deed of Trust as a security interest to assure me the Landlord/Seller will cooperate at close of formal escrow to my tenant buyer. I went to a RE title co atty here in Hou. to discuss all this with him & he went in to SHOCK! He said,"The seller won’t accept this DOT from a sales standpoint and on and on…ta da,ta da… " for an hour. What disturbed me was that he said at the TIME of signing the DOT the seller was protected by Texas’ very pro owner homestead laws & the DOT could be “set aside” in the future negating my security interest. I don’t want to believe him! If any Texas investors doing sandwich l/o could respond I would be grateful. Some questions I have are as follows: Do you use a Perf DOT on your sandwich l/o? If the DOT is from a course like Bronchick’s what did you amend to make it state specific? If you are really heavy into this type acquisition I’d like to get with you on my 800#. I think I’m right by saying Texas is a DOT state (not a mortgage state). Please comment if you know for sure. Also, not to confuse the issue even more, but should a note be prepared along with the Perf DOT? If anyone from Austin responds I’ll go into more detail about an atty in Austin who routinely closes L/O for a huge fee in an uncoventional manner. As always, any response is appreciated even if you’re not from GOD’S COUNTRY (TEXAS!) Just kidding!

Re: TEXAS INVESTOR’S !!! LEASE OPTION ALERT!!! - Posted by Bud Branstetter

Posted by Bud Branstetter on January 30, 2000 at 21:55:19:

I confused. While Texas is pro-homestead the seller is no longer a homestead owner as he is now leasing the property out. The performance DOT and accompanying note is to clear subsequent liens or judgements. It is not to strip title from him. If he has signed a deed that is being held in escrow what case would he have to say I can negate the sale because I have susequent liens. A title attorney would be looking at a most conservative point from title considerations. I would ask is the attorney board certified in real estate? You can always ask mine who is? Most anything can be challenged. How much money do they want to spend to prove their point. The local attorney at AIREO suggest using a mediation and arbitration agreements. Even those could be challenged. While you want a good attorney to review you may or may not have wasted an hour. But don’t let that keep you from finding and doing a deal. The odds are in your favor that nothing will go wrong. All the problems gravitate to Jeff Baron so you don’t have anything to worry about.

Re: TEXAS INVESTOR’S !!! LEASE OPTION ALERT!!! - Posted by Jeff Baron (Dallas,TX)

Posted by Jeff Baron (Dallas,TX) on January 30, 2000 at 18:52:46:


Laws in Texas are considerably more protective of owner occupied properties than in most states. Although the sellers you’ll be doing L/O’s with will likely not be occupying their homes, you may want to do what some other Texas investors do and get the seller to sign an affidavit relinquishing their homestead in the property. If you need the names of some good Texas RE attorneys, send me an E-Mail and I’ll give you some names.


Posted by Doug on January 30, 2000 at 17:58:29:

Instead of asking Reed, I would prefer asking Bill B himself. Unlike Reed, Bill actively works LO.

Re: TEXAS INVESTOR’S !!! LEASE OPTION ALERT!!! - Posted by Lynn_Atlanta

Posted by Lynn_Atlanta on January 30, 2000 at 16:52:26:

Hi Gene,

Georgia law and Texas law are obviously different, and I am no attorney (in any state), but I am a very active investor in Georgia, and I always file a Security Deed to Secure Performance when buying via lease-option. The form that I use is the same as a Security Deed that is filed in Georgia to secure a debt, except that the words Borrower and Lender are exchanged with Obligor and Obligee.

There have been questions of whether these Security Deeds are enforceable. Fortunately I have never been put into a position that would require me to actually enforce the Security Deed. Whether it is actually enforceable or not, I like the idea that my seller knows it is there to protect my interest.

If you are setting up escrow of all of the other documents, you are probably doing more than most investors out there. One thing for sure, it sure can?t hurt to have a little more protection, so why not file the deed?

Good Fortune!
Lynn Hahn

p.s. JPiper also has a good point about filing a Mortgage to Secure Performance if that makes your attorney feel any better. :slight_smile:


Posted by JPiper on January 30, 2000 at 13:34:31:

Don’t know beans about Texas law. But what I’ve done many times is to record a regular 2nd mortgage. That is permitted in Texas isn’t it?