DOS And Contract For Deed
Do any of ya'll have any experience with a note being called due when you record a CFD? I'm going to do owner financing on a home and plan to use CFD to keep the deed, while the taxes and insurance are still deductable for the buyer.
Any insight/experiences would be apprecited. We are set to sign things on Friday.
House Status:
FMV = 125k; Selling for 122,800 @ 8.75% with 3% down; I have 109,500 total in the property (105,300 mortgage @ 7.125%) Bottom line is, $3600 due at signing, PFC=$238/month, $13k-14k profit on the back end.
~Chris
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Live long and be profitable![ Edited by c-brainard on Date 10/28/2003 ]
Why would you record it?
A CFD could be considered a violation of the DOS clause. While I've never personally known anyone that has had the DOS clause called, note that it is a possibility, however slim. Either be prepared or don't do CFD.
Roger
Texas state law requires CFDs to be recorded. Trust me, that is the only reason.
-Chris
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I've heard about Texas and their new rules.
I personally think I would use a L/O over a CFD in your case (with my limited knowledge of your state laws).
Roger
The problem is, the lease option still violates the DOS clause, but doesn't permit the tennant to write off taxes and interest. I realize I shouldn't care, but the happier and more beneficial keeping the property is to my tenant, the more likely they are to make my life easier Is there a way to structure a lease option to give them the tax writeoffs?
-Chris
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c-brainard,
Check out an All Inclusive Trust Deed (A.I.T.D.) better know as a Wrap.
John $Cash$ Locke
Wouldn't I still have to file a wrap around mortgage? I would assume it could include a transfer of the deed.
-Chris
p.s. Thanks for the help guys =)
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I'd suggest you find and read the TX Statute on RE Contract. It's lengthy and has a number of requirements you need to understand before deciding to use it.
It's not difficult to read or understand, and it's easy to find, using Google or another search engine to find TX Statutes then finding RE Contract.
It was enacted because of the large number of complaints over lots of years against RE Sellers who sold on Ks, and sometimes NEVER delivered a deed, even well after the contract was paid in full !
And yes, a REK could certainly trigger the DOS; you'd need to read the D/T already in place to see what its provisions are. They're not all the same, and not all D/Ts have DOS clause written in.
Generally speaking, the thing that would cause the first lender to call its D/T would be their discovery that the borrower has sold...and the way that happens is the new deed or REK is recorded in the deed records in that county.
Value of the L/O is it is NOT recorded, and to make sure it's not, don't allow it to be notary public acknowledged...no NP's acknowledgement, no recording !
As other posts and articles here have said, another way to sell, without triggering the DOS, is by use of a Trust, having seller convey to his own trust, then buying an inteest in the trust itself...it acts like a holding corp.
So, it sounds like 2000Rock's old 30 year lease option that everyone hates might be a good idea? I'm not really concerned if they consider it a sale legally, but that would allow me to avoid recording it and have the same results.
Is there a way the lease to owner could still write it off the interest as tax deduction? Could this be accomplished just by filling out the proper paperwork at the end of the year?
-Chris
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