Speaking of Contracts

[<Steve> 82]

Without asking me my state passed a new law a few months ago for Lease Options and Contracts for Deed.

 

It's called the "Home Owner and Home Buyer Protection Act"

 

Don't know how I missed not hearing that the world was coming to an end, but now all L/Os need to be recorded, SLOs and CAs. Most of the law is adding little things like the full names of sellers and t/bs, adding the legal description of the property, and the addresses of the t/b and the 'seller of the option' and 'seller of the house.'

 

One clause that needs to be added is that the t/b can cure a default (like not paying the rent) one time in a 12 month period.

 

Another clause has to be in bold caps in 14pt above the signature line it states, in so many words, that the t/b is allowed 3 days to cancel the option agreement after signing.

 

Also, if the seller goes into foreclosure the option consideration will be returned to the t/b, but not the rents paid. Gotta watch those SLOs.

 

The good thing is that a Lease with an Option to Purchase is now governed by landlord tenant laws, so although it is still good to have separate agreements, if the option to purchase is covered by a lease, it is a tenant / landlord relationship.

 

Well I closed a CA last weekend so I have 5 business days to get it recorded. Looks like I'll need to get my notary stamp too.

[Kyle-OH 0]

Where you at?

 

 

 

 

Without asking me my state past a new law a few months ago for Lease Options and Contracts for Deed.

 

It's called the "Home Buyer and Home Owner Protection Act"

 

Don't know how I missed not hearing that the world was coming to an end, but now all L/Os need to be recorded, SLOs and CAs. Most of the law is adding little things like the full names of sellers and t/bs, adding the legal description of the property, and the addresses of the t/b and the 'seller of the option' and 'seller of the house.'

 

One clause that needs to be added is that the t/b can cure a default (like not paying the rent) one time in a 12 month period.

 

Another clause has to be in bold caps in 14pt above the signature line it states, in so many words, that the t/b is allowed 3 days to cancel the option agreement after signing.

 

Also, if the seller goes into foreclosure the option consideration will be returned to the t/b, but not the rents paid. Gotta watch those SLOs.

 

The good thing is that a Lease with an Option to Buy is now governed by landlord tenant laws, so although it is still good to have separate agreements, if the option to purchase is covered by a lease, it is a tenant / landlord relationship.

 

Well I closed a CA last weekend so I have 5 business days to get it recorded. Looks like I'll need to get my notary stamp too.

[<Steve> 82]

NC

 

I think all of this came about when the Fed government was up in arms trying to pass the 'safeact' and other financial regulations. I am sure my state jumped in to see what freedoms they could grab. After reviewing the initial bill to see what could have happened, it was watered down a lot; thank goodness.

[MichaelC 160]

Steve, seems more like an annoyance than a deal killer for you. Still, I loathe these damn government regulations and the nanny oversight mentality that is becoming ever more prevalent.

[<Steve> 82]

So true MC

 

The one positive thing is that now having a specific format for doing L/Os, and following the rules, no one can get into your face saying L/Os are 'illegal'

[pilot76180 51]

Steve, Steve, Steve, Steve.....

You dont' get it do you?

Because NC has statutes that actually address LO's, LO's are now considered ILLEGAL in the state of NC.

At least....that's how it is in TX.

They draft laws, so now it's "illegal".

Just wait amigo...you will hear all the f ing crap I heard...

We have very similar statutes, except it does not have to be recorded.

I would like to know though, who's responsibility is it to record the option?

I assume NOT the T/B's....which, your LLC would be the T/B.

[pilot76180 51]

BTW- Steve, Philip Cook, and all those in NC, please refer to my post from 2005 about the laws in TX and how to abide by them.

I have attorney's say that LO's are illegal in TX.

I ask why, and they say, "the law requires this that and this..."

My replay..."No. That refers to a contract for deed. If you'll refer to section 5.blah blah blah.....it clearly states that does not apply to a LO"

silence.........

[<Steve> 82]

Steve, Steve, Steve, Steve.....

You dont' get it do you?

Because NC has statutes that actually address LO's, LO's are now considered ILLEGAL in the state of NC.

At least....that's how it is in TX.

They draft laws, so now it's "illegal".

Just wait amigo...you will hear all the f ing crap I heard...

We have very similar statutes, except it does not have to be recorded.

I would like to know though, who's responsibility is it to record the option?

I assume NOT the T/B's....which, your LLC would be the T/B.

The law states the seller is to record the option.

 

However the seller is defined as:

Option seller or seller. – A person or entity that makes a sale of an option by

means of an option contract, or the person's or entity's successor in interest.

If an option contract is subsequently assigned or sold to a third party, the

assignor shall be deemed to be an option seller or seller for purposes of this

Chapter.

 

With this definition my LLC would be the seller as I am assigning my interest to a third party.

This is what has me messed up at the moment.

[pilot76180 51]

Well, then your LLC would record it at the courthouse it seems.

Just like if you were doing a SLO and recorded the Memorandum.

But you know the great thing about going to courthouses?

There are normally good restaurants around there.

[<Steve> 82]

Yes, it looks like I will be at the court house quite-a-bit.

 

I record SLOs anyway with the owner, so when I place a t/b I will record a second memorandum between me and the tenant/buyer.

For CAs I will record when I place a tenant/buyer and it will be between the owner and the tenant/buyer.

 

That is how I am going to start until my hand gets slapped.

 

Restaurants You know there is a hot dog stand by the court house that sells a really good "Bratwurst" now that you mention it.

 

Here is the new law for those legal inquiring minds out there. Page down to Lease Options.

Lease_Purchase___Contract_Deed___Law.pdf

[pilot76180 51]

Seems odd they would want the Assignor to record it, since the Assignor is out of it at that point. Hence...assigning the contract.

Seems the almighty all knowing politicians would know that when you assign a contract you are doing so to be out of it.

Just seems more logical to have the assignee or seller do it.

[<Steve> 82]

Laws and regulations never make any since to me. Logic seems to have nothing to do with it. As is typical it is all about interpretation.

 

I am not finding much chatter about the law now that it has passed as compared to Texas in the past. And because the law is new there are no boiler plate legal documents to meet other aspects of this law (like eviction is now default and forfeiture ). And I doubt there is a damn attorney who knows much about this law. So, I am going to work through it as best I can for now and if there is a specific hang up I will then be able to "tell the attorney what to do."

 

I hope I find I am wrong and you are right. The way I am reading it, the definition of "seller" is also the assignor (me), assigning to a third party (t/B).

 

For now I will make sure that the memorandum gets recorded but the names on the memorandum will be the owner and tenant/buyer for CAs. You know how the REC is. One complaint and they are on your sh*t like flies tying to find any issue to close you down.