movinghome 0 Report post Posted February 1, 2014 I am working with this motivated seller, a 80 yr old lady. She owns a townhouse and ready to move out by the end of February. It's a good neighborhood and she has kept the house clean for all the years she lived in it. She currently owns $87K and the house worth $120K. She also owns $15K backup taxes. She agrees to let me take over the payment and she will pay $15K of the backup taxes at close. My stagy is to take over the title with subject to for $87K and do a lease to buy with tenant buyer 5% down at $120K. The rental income will cover the mortgage, HOA and insurance. The problem is she can't pay the $15K backup taxes until June, but she would like to have her mortgage covered when she moves out by the end of February. I really don't want to take over the payment unless the backup taxes are paid and title is clear. But if I wait, she said she wants to rent out when she moves out. And it will take very little time to rent out. So I may lose this opportunity. What other options do I have to make the deal work? Sorry for the long post, I tried to explain it as clear as possible. Thank you Share this post Link to post Share on other sites
<Steve> 82 Report post Posted February 1, 2014 Take possession as a sandwich lease option; place a tenant/buyer, and in a few months take title 'subject to' when the back taxes are paid. I would look at the deal as if the taxes will end up not being paid. What is the possibility that the town house will be foreclosed on due to the back taxes? Share this post Link to post Share on other sites
movinghome 0 Report post Posted February 1, 2014 when I place a tenant/buyer and get the option fee upfront. Worst case scenario, the seller doesn't pay the backup taxes, would I put myself into lawsuit jeopardy even if I refund the option fee? Share this post Link to post Share on other sites
movinghome 0 Report post Posted February 1, 2014 what cause do i put in the contract with the seller to protect myself? Share this post Link to post Share on other sites
<Steve> 82 Report post Posted February 2, 2014 In my state if the house goes into foreclosure the option consideration will need to be returned. Maybe she will pay the back taxes maybe not, that is something I would ask myself before going into the deal. I mean why can't she pay them now? What will a couple of months do to make the difference? That is what I would ask her to help make your decision. Share this post Link to post Share on other sites
movinghome 0 Report post Posted February 2, 2014 Thanks Steve. She doesn't have enough money to pay the taxes, short 5k. she is waiting for the tax return money and a few more month of savings to pay. Share this post Link to post Share on other sites
MichaelC 160 Report post Posted February 2, 2014 I'm always leery when a homeowner or t/b tell me they will have the money next week, next month, etc. More often than not it doesn't go according to plan. Waiting for a tax return is one of the standard replies I hear this time of year. I'd be cautious with this one. Share this post Link to post Share on other sites
movinghome 0 Report post Posted February 2, 2014 Thanks Michael for the caution. Do you suggest me to wait she has the full payment for the backup taxes before I take over the property? What would you do? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted February 3, 2014 I'd play it safe and not do the deal until I have proof the taxes have been paid. My thinking with any deal is that even if it's a deal I want, there's another one down the pike. So if the deal is shaky I'm going to pass. Remember, we're looking for motivated sellers. We should never be motivated buyers. Share this post Link to post Share on other sites
movinghome 0 Report post Posted February 3, 2014 Very very good point Michael, never be motivated buyer! Share this post Link to post Share on other sites