Hi Gang,
we were wondering whether anyone has come across this situation before.
The investor has set up a lease option deal with a motivated seller and a tenant-buyer.
The motivated seller has a mortgage over the property and defaults on the loan repayments.
The bank then moves in to sell the property, thus depriving the investor and the tenant buyer from the chance to exercise their options.
Tenant buyer than gets stroppy [
!]and sues investor for loss of promised opportunity for which they paid a fee.[]
Is there a way to avoid this?[]
Looking forward to hearing from you.
Andy & ClaireMy suggestion would be this…
Does the bank care where the morgage payments come from? Saying this, if the deal is worth holding onto could you not come forward with the morgage repayments on behalf of the seller to avoid the foreclosure? You may also be able to take this off the contracted sale price (or work out some similar deal with the seller) so that it doesn’t come out of your pocket in the long run.
P.S – The rehitorical question.. No, the bank doesn’t care where the payments come from [
]Assuming the deal set up is a kind of lease option, then I’d arrange to have the amount of the mortgage payments automatically paid into the bank mortgage and then be sending the seller the remainder…
Also, I know that in North America when an investor puts down an option it’s normal to also register a, I think it’s called a “Notice of Memorandum” which clouds the title, blocking the sale or refinancing of that property without the agreement of the option holder. Presumably this would also mean that the bank had to contact the option holder also… [?]
Good question! What says everyone else on this?
Quasimodo
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It seems to me that action has a most magic way of answering all the questions our fearful mind tries to throw before us…
__________________________________________________Maybe hee in Oz you could put a caveat on the title so nothing can be done without your knowledge.
Just an idea.Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert Einstein[
]
Thank you respondents.
I think the caveat idea + the automatic payment to the bank of the seller’s lease payment would be a powerful combination.
We appreciate your input.
Regards,
Andy & Claire
!]and sues investor for loss of promised opportunity for which they paid a fee.[
]
]
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