I Guess You'd Call This A Short Sale -- Newbie Needs Advice
There is a property in the next tax sale. Owners own the home free and clear and have been trying to get the back taxes paid before it goes on the block Tuesday. There is also a mechanics lein on the property but that is all I can find. I've been thinking about something that might make for a good deal for me and the present owners and need you experts to let me know what I might be missing.
FMV $25,000
Taxes $5400
Mech Lien $3000
My thought was to see if I could get the owners to transfer the deed to me and I would pay the back taxes and the lien. They could rent back the property from me at a lower rate then they could rent anywhere else and still be in their house.
I am thinking the owners will consider this because I can put a buyback clause into the lease that gives them the right to redeem their property for a year at my costs plus interest. If they lose the property to the tax sale process they've only got 6 months to redeem and must pay a 25% premium on top of the tax sale price. The house will probably go for far more than the back taxes when its at the auction. If they cannot redeem they can then still be living in their home with a standard lease agreement.
So first question is whether I'd need to have a title search done on this property before go to the owners with this deal. I am pretty confident that I effectively searched for IRS and other liens and but I am new to this process.
Second, I'm pretty sure this is legal but tell me if I'm missing some basic law here.
Finally, what docs would I need to bring to the house with me when I approach the owners?
The tax sale is Tuesday so any insights would be great.[ Edited by robstac1 on Date 04/30/2004 ]
I wouldn't call this situation a 'short sale' but I would think that you have a good opportunity.
I would approach the Owner with your Proposal for a sale/leaseback.
If he/she is agreeable, press for the Owner to pay for a title search...
Personally, I would agree to pay the Owner a total of 50% of the value for the property... or $12,500 (less the tax lien, less the mechanic's lien, less the costs of the transaction including Tenant insurance policy, and split the balance between a rent escrow, and cash to the Seller.... then lease with an exclusive option to purchase. The EOP would be downgraded to a right of first refusal upon any breach of the Lease.
[addsig]