The Seller’s Loss of the Property Part 3
A seller who is in financial difficulty is not one from whom you want to get a lease-option. Even if the seller wants to sell you the property, it can turn out that when you eventually exercise the option, she may be in such financial straits that she can’t comply with it.
Some states now require that before a seller can give a lease-option, he or she must own the property free and clear, or very near to it. The idea is that that seller must be in a financial position to be able to go through with the option portion of the deal. Check with a good agent or attorney in your area to see what the local rules are.
This previously rare problem has become more acute in recent years because of the actions of some unscrupulous speculators. They have bought properties themselves using a variety of financial devices (including the lease-option). Once they gain control of the home, they then rent it out for the maximum rent, achieved largely through the use of the lease-option given to unwary tenants-buyers. They collect the rent but sometimes make no payments on the mortgage.
They may be able to control the property and collect rents for a year or more before the lender finally forecloses or the original seller takes the property back. From that point on, the speculators are out of the picture. And all your money, as well as your option, could be lost.
As before, you can’t really eliminate the risk. But here’s how you can minimize it.
No related posts.