Florida lease option contract?

Question

Hey BP,

I hear mixed reviews on doing lease option or subject to deals.

I am hoping some one can finally nail this down for me and explain the correct way to structure a lease option contract (subject to the existing loan).

This is in regards to deals in the state of Florida.

Thank you in advance and I really appreciate any advice.

Laura Richards · Answer

A lease option contract consists of multiple agreements. First there is the lease. The buyer is nothing more than a glorified tenant until such time as he or she fulfills all obligations under the option. Hence the need the for an option agreement which states the terms that must be satisfied in order for buyer to purchase the property ( payments of $X every month for a term of Xmo/yrs with final purchase price being X). A notice of option may also be recorded in public records. Disclosures are also key in proper construction of lease options.

A subject to deal can be structured by using the ever popular FarBar contract and specifying the subject to structure of the deal in the financing options section. A FarBar can be found with a simple google search and/or the Florida realtors website.

A subject to deal can be structured by using the ever popular FarBar contract and specifying the subject to structure of the deal in the financing options section. A FarBar can be found with a simple google search and/or the Florida realtors website.

Wayne Brooks · Answer

A sub2 is where you take title subject to the underlying financing (not actually assuming).  A wrap is similar in that the seller wraps the existing mortgage into a larger seller financed offered mtg.  In a straight sub2 the seller has no right to foreclose(not good for him) whereas with a wrap they do.  Either one has the risk of the underlying note being called thru the due on sale clause.

Paul Springer · Answer

Thanks Wayne.

Could you point me in the direction of seeing example contracts pertaining to sub2 / wrap transactions?

I always hear people warning of the bank calling the loan due.... but I also know it does not stop many investors, and most (from my understanding) have never had a loan called.

Is this similar to your experience?

Thank you in andvance.

Brian Gibbons · Answer

@Paul  Springer

I coach lease options, subject to and wraps for acquisition

Give me a scenario where

you were entering into a lease option and assigning?

Or entering into a sub to and renting?

Or buying on a wrap and renting?

Realize the sub to and the wrap have a due on sale clause

I like sub to for a short time, like a buy fix and flip

If you're entering into a lease option and assigning the state of Florida looks at that as brokering

I wonder why you're in Connecticut and trying to do Florida deals, as a rookie I wouldn't advise it, The stills generally need face-to-face interviews with the seller

@Wayne Brooks

Brian Gibbons · Answer

@Paul Springer

Hi Paul,

Florida is a Land Trust state, and sub2 and land trusts go hand in hand.

Re the loan being called, it is rarely called if the loan is paid on time and the insurance is in force.

Having an attorney in FL is really important in lease options, sub2 and wrap purchases.

Danielle Levins · Answer

@paul

@Paul Springer great question, I have been wondering where to find a lease option contract and the best way to structure the lease option. Please let me know if you received any new information regarding to this question.

Paul Springer · Answer

Brian,

Thank you for your reply.

I actually relocated to Florida, and I am now trying to familiarize myself more with creative financing options.

The Florida market is heavy on competition, so I need to learn more if I want a better shot at securing a deal here.

Can you give me a common scenario, where sub2 would be used (in its simplest wording)?

And how exactly do a Sub2 and Wrap differ?

Thank you in advance!

Florida lease option contract?

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