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UPDATE ON TEXAS LO's


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#1 pilot76180

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Posted 23 January 2006 - 01:37 PM

I have drafted a quick list of what we will have in our docs. We should have the final doc draft this week, but this should give everyone an idea of what we are doing to be in line with the law. I will post again after we have the final draft:

LO’S in Texas



Seller’s acknowledgements state:
Lienholder does not prohibit the owner from entering into a lease with the option to purchase on the property
Lienholder will accept payment directly from the T/B
We also have a DOS notification paragraph, stating that the homeowner should be aware that there might be a DOS clause in the mortgage, and they should contact the Lienholder if they have any questions regarding the DOS.
(Note: some attorneys will say that the mtg company has to give permission in writing to do a LO. This is not true at all. Read the law. It says NOTHING about getting permission in writing. It simply states the mtg company doesn't frobid a LO.)

Option to Purchase:
Don’t forfeit rent credit for late payment

Lease:
Late fee is $25 per day up to 3 days, therefore we do not exceed the 8% of the monthly rent.
(After 3 days they are on the way to being evicted anyway.)
Arbitration clause for all parties involved. Nobody can go after anybody without first going to arbitration. (This does not include action taken by the owner for non-payment or eviction)

Authorization to release information:
Form that the homeowner completes then we would put the T/B’s info on.

Lienholder’s disclosure completed by homeowner:
Stating the lienholder’s name, address
Balance, payments and due date.
In 14 point type that if the owner defaults on the mortgage the lienholder may foreclose to secure the debt.

Assignee’s Acknowledgements:
Added the Arbitration clause that is in the lease.
www.Leasingtobuy.com
www.Texasleaseoptions.com
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#2 MichaelC

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Posted 23 January 2006 - 07:10 PM

From what I see, these are not the earth shattering changes that people seem to be saying. I mean, I have had three emails in the past week from TX based investors asking if creative real estate has been deemed illegal in their State. A bit more detail, some additional disclosure, and all seems fine. Am I missing something here?

#3 pilot76180

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Posted 23 January 2006 - 09:32 PM

From what I see, these are not the earth shattering changes that people seem to be saying. I mean, I have had three emails in the past week from TX based investors asking if creative real estate has been deemed illegal in their State. A bit more detail, some additional disclosure, and all seems fine. Am I missing something here?



You are pretty much on target MC. I've been amazed at what some attorneys are out there saying about LO's. One said that the lender has to APPROVE the T/B now, as in take an application from the T/Ber!! I have no idea where he got that. It's like the old rumor game where people sit in a circle and one person says something to the next person. By the time it gets around, it's totally off base.
I actually agree with some of the law changes, possibly because we've always done so much to protect everyone invloved.
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#4 Caveman

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Posted 25 January 2006 - 01:19 PM

Thanks John. But what would you suggest for those still in the beginning stages as far as what contracts to use in Texas.

I want to continue CA's, but feel uncomfortable trying to interpret these laws myself, and modify MC's contracts on my own.

#5 pilot76180

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Posted 26 January 2006 - 02:39 PM

Unfortunately, my suggestion, would be to call a local RE attorney, tell him/her what you are doing or trying to do, and see what their reaction is. You are in a creative business, you must have a creative attorney. One that is able to read the law for what it is, and make the necessary adjustments. You may have to call 5 or more attorneys. I honestly think that several months from now when the smoke has settled, that there will be more people, investors and attorneys willing to work with or do LO's.
If you print off the house bill from the Texas legislature site, and put it together with the property code Chapter 5 regarding conveyances, it tells you what needs to be in the docs.
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www.Texasleaseoptions.com
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#6 turbojarhead

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Posted 28 February 2006 - 09:00 PM

Hi, Pilot, have you been doing any L/O's in Texas with your new contracts? I have spoken to a couple of Seller's about L/O's lately and they have been very leery about them with the new Texas laws. Any info is appreciated, Brad

#7 pilot76180

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Posted 01 March 2006 - 05:50 AM

Hi, Pilot, have you been doing any L/O's in Texas with your new contracts? I have spoken to a couple of Seller's about L/O's lately and they have been very leery about them with the new Texas laws. Any info is appreciated, Brad



Hey Brad. We've done several this year. Most sellers don't know about the law. Why would they? I don't spend time trying to convince sellers or investors that LO's are legal. If an investor is leary, then I don't have time to mess with them. TREC gave our attorney suggestions for our docs, so obviously TREC knows they are still legal.
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#8 Ryan Webber

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Posted 12 October 2006 - 09:26 AM

I looked for the most up to date topic to post some of the LO issues in Texas, so I hope this is it. Lease options in Texas are not illegal, but they do come with some severe penalties if they are not done correctly to a "t". First off any LO over 6 months in term falls under an executory contract or contract for deed regulations in Texas. These regulations are thorough and stringent with upto $250 per day liability for violations from the day of execution of the contract. Lease options are still legal in Texas but carry very particular and extensive regulations that must be followed or the seller can become extremely liable. Everything ranging from providing a survey before closing to filing the contract at the courthouse, and that is just the beginning. Even the die hard LO investors I know have shunned away from LO's and have shifted to other creative avenues. If you are adament that you are going to do a LO in Texas, I would highly recommend you have a very competent lawyer walk you through the process and clearly outline to you the risks involved.

Ryan Webber
www.AmarilloHomeBuyers.com

#9 SAbboushi

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Posted 16 August 2013 - 01:21 PM

Seller’s acknowledgements state:
Lienholder will accept payment directly from the T/B

 

Doesn't the acknowledgment need to say that Lienholder has CONSENTED to accept payment directly from T/B?



#10 pilot76180

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Posted 10 September 2013 - 02:30 PM

This is in regards to if the seller defaults, so the authorization to release allows the lender to release the mtg info and if the seller defaults then the buyer can make the payments to the lender


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