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moneynfast

Preliminary Title Search

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Michael when you do a lease option on a property is it necessay to do a Preliminary title report? The reason I ask is because if you sublease to a tennant buyer, and its time for them to exercise there option, and a lein are to comes up, they will be very angry, and they problay want to file some law suit against you. As a begginer with no money, that is kind of expensive to do. Have you ever had a situation like this in your years of leasing property to people?

 

Michael :o

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Michael, doing a title search on every property you are considering doing a deal will become very expensive, very quickly. So, no, I don't do a title search as a matter of routine. Nor does anyone else that I know of.

Personally, only once in all my years and deals did I have a homeowner go around me. She refinanced her house for about $5K more than her agreed to purchase price to me. We found out when my tenant/buyers elected to exercise their option. (The deal in question, by the way, is this one.

To make a long story short, once her act was discovered, a few threatening words and she anted up the cash at closing. (To this day none of us could figure out how she was able to refi the property with a Memorandum of Option recorded it against it.)

That exception noted, most deals will not present these sorts of problems, Michael. Always record that Memo of Option that I mentioned above. Usually, they are good protection against such problems.

Listen to your gut, too. Is the homeowner someone who makes you feel warm and fuzzy? Or are you having some second thoughts and suspicions? Perhaps you should walk?

Finally, don't sign any lease purchase agreement as an individual. Set up either an LLC, or a Corporation. In the event of any legal action, you can't be sued personally, and your personal assets are protected, also. No small matter. Keep in mind I am not an attorney, and am offering my opinions here on asset protection. You would be well advised to speak with a qualified professional regarding LLC's and Corporations, and which suits your personal situation better.

One last thing: do not let the fear of what bad things might happen prevent you from succeeding. Be prepared, do your due diligence, ask questions, and achieve your goals of making this business your business.

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