Title Search---Need Advice From Experts
Is it necessary to do a title search on each lease option that you do? And is it necessary for me to obtain insurance?
I am still in the process of learning all I can (all of the important stuff, especially). I want to cover myself, can't afford any lawsuits.
Some have told me to just get started but I guess I'ma stickler for covering all my bases and making sure everythis is legal and binding. 
cjmacks,
Glad to meet you.
It is always wise to do a title search when buying any property. However with Lease Option whatever happens to your seller happens to the property.
Let's say your seller has a lien from the IRS a year after you lease/option the property, this will attach to the property, then your Leasee when the time comes for them to purcahse will want to have you live up to the Option conract, are you prepared to pay off any liens or encumbrances that your seller has placed on them during the lease period which attaches to the property?
Just something to think about.
John $Cash$ Locke
Hi John,
would it be possible to insert a clause of some kind stating that if any lien or encumbrances of any kind are placed against the property during the length of the Lease Option Agreement period, that this constitutes a breach of contract and that said contract immediately becomes null and void? or, that if lien and encumbrances are not removed at once or in x number of days that the lease Option agreement is in breach of contract and will immediately become null and void? Just a thought I had. But I do agree that it is a good idea to do a title search.
Thanks for your help.
cjmacks,
Yes you could put any clause in you want, but if your seller cannot or will not take care of the problem and the contract becomes null and void, what are you goint to tell your Tenant Buyers?
I wonder if your Tenant Buyer would sign an Option with you that said if the Lessees (You), Lessor (Seller) defaults then I lose my house. You could probably use some fancy words but the bottom line is where is your protection or your committment to your Buyer headed?
John $Cash$ Locke
What about this?
Failure to remove any liens or encumbrances placed on property during the term of the L/O agreement within 30 days after notice is given to lessor by lessee shall constitute a breach of contract of this option to purchase agreement and lessee shall have all remedies for damages as provided by law. Lessor will be required to return all consideration paid by lessee to lessee within 30 days of notification, plus interest of 18 to 25% thereon to both lessee and tenant/buyer and cancel this option to purchase agreement, and in such event, neither party shall have any further obligation hereunder.
That's all I could come up with. Any ideas as to how I could prtect both myself and my tenant/buyer? cj
Hi cjmacks,
If you want to protect your buyer from anything that your seller might do then you have to get the seller out of the picture.
If you buy the property and have to seller deed the property to you, then now the seller's actions won't affect the property and problem solved.
Best of luck
John (LV)
Thanks John,
That's why I wanted the advice of an expert. You really know what you are doing.
Would that be anything like a warranty or grant deed. Or buy it outright and have them sign the deed over?
Would the seller sigh a warranty or grant deed with the grantee's name left blank and the notorized signature of the Lessor as grantor only?
Stupid questions, I know, but a person has to learn these things one way or another, and I figure why run the risk of messing up when you can ask someone with experience cj
cjmacks,
You can buy the property either with cash or a new loan if you want to buy conventionally or you can buy creatively using methods discussed on this board such as "Subject to" the existing finance.
In any of these cases you will get the deed (Warranty or Grant, Bargain & Sale) in your name, then all you have to do is resell for a profit, do a "Contract for Sale" for more profit, or do a LO or even just rent depending upon what your goals are.
It is actually a pretty easy process once you learn how to do it.
Best of luck
John (LV)