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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Safer to have the owner move on. Posted by Ward-CA- on January 06, 2002 at 7:17 AM In Reply to: Fair or Unfair? posted by Ron M on January 04, 2002 at 6:08 PM : Ward, : What is your opinion of this? : Owner is in default. Has a lot of equity and doesn't want to sell home. : Buyer offers a solution. Buyer tells Owner he'll reinstate loan. Owner must deed property to Buyer. Buyer is now New Owner. New Owner will rent property to Old Owner. Old Owner gets a 5 year option to purchase back property from New Owner anytime, at the sale date market value plus any price appreciation, plus original costs to reinstate loan. : Option is nullified if Old Owner doesn't make rental payments on time. : Pro's for Old Homeowner? Gets a second chance, gets loan reinstated, gets to stay in home, and doesn't lose any of his current equity. : Con's? If he doesn't keep up with his rental payments, he loses home and ALL of his equity. : I imagine a good chunk of homeowners who get involved with this will wind up missing their rental obligation and losing their equity. : So my two questions to you is... : Is this legal in CA? : Do you think it's an oppressive strategy? IE unfair? ==================== There are a number of cases here in CA on this issue and it seems that in most of them the courts hold that the lease/option approach is just a re-financing device that the original owner is now in default on. So therefore the courts dictate that the default remedy is to foreclose against the owner/occupant rather than just evicting them for breaching the lease. This approach has never been a favorite of mine. It seems fraught with more lawsuit activity later on as the property goes up in value and the owner inevitably defaults and a messy eviction turns into a battle over the title to the property. I am a proponent of having the owner move out quickly and coming to terms with the loss of their house very early in the game. Then I will rent it or lease/option it to someone else who never had an ownership interest in the property before. In my twenty years in the business I've come to appreciate that a clean, clear break with the original owner over the issue of title and occupancy is more successful than letting them stay on in some fashion or other. Hope this helps. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Ward, : : What is your opinion of this? : : Owner is in default. Has a lot of equity and doesn't want to sell home. : : Buyer offers a solution. Buyer tells Owner he'll reinstate loan. Owner must deed property to Buyer. Buyer is now New Owner. New Owner will rent property to Old Owner. Old Owner gets a 5 year option to purchase back property from New Owner anytime, at the sale date market value plus any price appreciation, plus original costs to reinstate loan. : : Option is nullified if Old Owner doesn't make rental payments on time. : : Pro's for Old Homeowner? Gets a second chance, gets loan reinstated, gets to stay in home, and doesn't lose any of his current equity. : : Con's? If he doesn't keep up with his rental payments, he loses home and ALL of his equity. : : I imagine a good chunk of homeowners who get involved with this will wind up missing their rental obligation and losing their equity. : : So my two questions to you is... : : Is this legal in CA? : : Do you think it's an oppressive strategy? IE unfair? : ==================== : There are a number of cases here in CA on this issue and it seems that in most of them the courts hold that the lease/option approach is just a re-financing device that the original owner is now in default on. So therefore the courts dictate that the default remedy is to foreclose against the owner/occupant rather than just evicting them for breaching the lease. : This approach has never been a favorite of mine. It seems fraught with more lawsuit activity later on as the property goes up in value and the owner inevitably defaults and a messy eviction turns into a battle over the title to the property. : I am a proponent of having the owner move out quickly and coming to terms with the loss of their house very early in the game. Then I will rent it or lease/option it to someone else who never had an ownership interest in the property before. : In my twenty years in the business I've come to appreciate that a clean, clear break with the original owner over the issue of title and occupancy is more successful than letting them stay on in some fashion or other. : Hope this helps. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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