BiggerPockets

Two things, one you and the seller get on BP and look up due on sale and installment contracts. Have the seller read the profiles of those making comments on the subject.

Secondly, another advocate will probably be an investor friendly attorney in your area that will assist in the agreements. They will probably provide sufficient assurances as well.

Guess there is a third thought....give notice to the lender that you are about to do the installment agreement or wrap and see what they say. You might not get a reply....then speak to the attorney..

That's the short answer, IMO.

Mitch, it appeared to me that the seller is willing, he's not concerned with default as much as the DOS issue, right?

no. this is not a subject to deal . the owner wants to owner finance the whole deal ,the 40000 up front was asked by the seller as a means of clearing his note so that he could carry a free and clear note without having to worry about the due on sale clause . i want to gain control so that i can rent the house out to a section 8 tenant . if there is a way of gaining control without a complete transfer of title , i would still do the deal.

Originally posted by Bryan Hancock:

Originally posted by Troy Michaels:
ok, how can i work this so that the seller will do the deal without me paying off his note ?

If the seller is truly worried about the lender calling the note due your only real counter is to tell him you are going to ask the lender for permission prior to transferring title. There are all kinds of smoke and mirror games that can be played with trusts and such, but at the end of the day you will be triggering the clause and there is no failsafe way around the clause absent lender consent.

Having said that, if the seller is motivated this problem generally goes right out the window. I find that the people that have problems with this are the ones that over explain things to the seller and make them uneasy. The investor should have the ability to pay the note off in full in the unlikely event that it is called so it really shouldn't matter whether or not it gets exercised by the lender.

If the real source of uncertainty is that the seller thinks you won't make the payments you can insert an "in rem" clause in your contracts giving the seller the right to take the property back in the event you fail to perform as agreed.

Actually, a special deed of trust can be used for the wrap, which I used for awhile years ago before I got so bold in doing "In Your Face Lender" deals. (lol)

Your default provision is not limited to the power of sale where non-judicial foreclosures are permitted but you can also have a reversion in the event the lender calls the note with the seller selling the property and paying the borrower an agreed amount. There are other sweetners as well to have lenders look the other way. But I prefer the notice route and the lender failing to object in a timely manner, which may then be construed as consent, that's what I call a "In Your Face Lender" deal. (But don't call it that within ear shot of the lender!)

Then do a master lease and an option. You won't have those problems! Search "Master Lease" here on BP. Need help come on back!

This is usually just called a "lease/option" when discussing a SFR. The master lease is a more common term for a multi, since you're leasing the whole thing then subleasing the individual units.

Yep, you would want language that allows you to sublease.

Another option would be a land contract. The seller retains title, but you have more control than with a lease option. The IRS views a land contract as a transfer of ownership (i.e., you get to take the depreciation) where a lease/option does not. Strictly speaking, it does violate DOS, too, though. But the seller retains title.

Do a lease option with the right to sub-let. Do a seperate lease agreement with and the owner signing the lease as "landlord" for the Sec. 8 tenant.

If this is a problem, have the rental clerk at the PHA or Sec. 8 Adminstator let you spek to the Executive Director. The owner has to sign the lease, there is no prohibition of an owner and a senior leasee signing the lease. If the ED has a problem with that use an option and have the owner make the lease and he can assign the lease under your option.