Lease Purchas/Option Due-on-Sale Difference?

[Joe Lee 0]

Sounds like good gravy to me. The reason I apoligized in advance is I posted similar DoS realted topics on other forums and I seem to annoy those people with these 'bothersome ideas' when in fact I'm just trying to cover my end by not looking/acting impotent, if and when that situation does arise. Oh and to make sure that the seller understands what is going on, I seen this post (also on CRE online) by Joe Kaiser called The best darn document on the planet, and it has this seller acknowledgement agreement that to me will make a fine addition to my arsenal of "CYA" anyhoo, here's the link below

 

http://www.creonline.com/articles/art-198.html

 

Hope you like it as much as I do, hehe

 

Thanx again.

 

Peace-

[MichaelC 160]

I, too, have seen Kaiser's document. Personally, I think it is overkill and might actually frighten away a homeowner who may be intimidated and confused by all of the paperwork we thrust upon them.

However, if you have a rapport with the homeowner, (and you really need to, to succeed in this business), you should be able to make them understand it is simply a legal necessity, and then get it signed and the deal done. You are certainly covering your rear with it, too.

Good luck, Joe.

[Andrew Ikeda 0]

Joe Lee and Michael:

 

Bravo guys! This is one interesting topic and I'm sure I can say this on behalf of everyone else out there reading this.

Joe, your question is a great one and I'm glad you brought it up. I've been following this thread for a few days now with keen interest. If I understand you both correctly here is what I'm seeing and learning:

 

1) Michael is saying that if the contract is worded correctly, you wont have any kind of problems with the dos clause, right Michael?

2) Joe Kaiser mentions in his article to make real estate friends, particularly r.e. attorneys who can help you in those tough situations.

3) creonline has an article on Incorporating and LLC's (John Hyre) which I'm sure you have read. R. Kiyosaki in his "Rich Dad, Poor Dad" series emphasizes the importance of having a 'team' of professionals to help you and 'hold your hand' through the realm of the business world and investing (real estate included, of course).

 

I understand and appreciate the 'horror' stories that Joe Kaiser talks about, however, I understand what Michael is saying too about all of that being "overkill". Michael is correct in stating that we should not be overwhelmed by these kinds of situations because they probably wont happen anyways...besides, if you really read J. Kaiser's article, we would learn from his mistakes and protect our butts in the first place, correct? The way I see it, if one of those 'horror' situations should come up, we would have the contract as the first shield of defense and the r.e. attorney as a second shield. This may not be 100% bullet proof in some situations, but I'd be willing to bet that this would be 'hell on earth' for any banker to try working around. The overall message that both Messrs. Kaiser and Carbonare are saying is that if everything is done properly, you wont need to loose sleep over it, is that correct Michael?

 

On another note, let me ask and add that from the materials I've read, bankers are in business to own and control cash, not the house, correct? If this is true, should we be worried about the banks repo'ing the property and all this dos talk? I'm sure the bankers have their own 'horror' stories of how they had to 'repo' a property and then try to get the equity back out of it and how they had to fend off all the r.e. investor sharks like us.... (just kidding) Ok, enough from me.

 

Joe, thanks again for this question and Michael for the informative answers.

 

Sincerely,

 

Andrew

[MichaelC 160]

Hi, Andrew. I'm saying that a correctly prepared and worded contractual agreement between two parties will go a long way towards fending off a lawsuit. It does not guarantee that someone will try and sue you. Our society has become a litigation lotto, where anyone can sue anybody for anything.

Yes, the overall message that I, Joe Kaiser, and others say is that preparing yourself fully and properly is the best defense. Overall, this business is not one where you should be tossing and turning at night, stressing over when the next lawsuit is coming down on you. That should be the rare exception, rather than the rule.

Lastly, you are correct about banks not wanting to take back properties. That is their version of hell on earth. In fact, Federal regulators keep a watchful eye on lenders who take back properties. A bank that forecloses on properties as a routine matter is very carefully scrutinized by the government.

[Andrew Ikeda 0]

Hello Michael. Thanks for setting me straight on your remarks with the contract. I went a little overboard when I quoted " if the contract is worded right, you wont have any kind of problems with the dos clause."

Thanks for pointing out about the Fed regulating banks on the number of repos. I had read about that somewhere but forgot about that point.

Again, thanks for your help and advice.

 

Sincerely,

 

Andrew

[Joe Lee 0]

Not to mention, that if a lender is FDIC insured and that lender forecloses on a house, FDIC will whack them over the head with a penalty. For example: if a lender lent out 100,000 dollars to someone, and that someone defaults causeing foreclosure, FDIC will freeze 8 times the amount that the lender has to lend out to borrowers. Another yet powerfull reason that the lender probably won't call the loan due unless forced to through lack of payments. Good for us, bad for them hehe

 

-Joe

[Roger_FL 0]

I would think in today's market and interest rate enviorment, the mortgage holder would not want to invoke the DOS clause. Most likely if they had to resell as REO, or reinvest their money in a new mortgage, they would receive a much lower interest rate. This is particuliary true if the current seller has not refinanced recently (because he may have bad credit, etc.)and has had the financing in place for a few years.

Just my 2 cents