Your Loan Has A Due On Sale Clause

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

For years now, all loans have had a "Due On Sale" clause. That means it has to be paid off when the property changes hands, unless the lender approves an assumption. An assumption is not a "Subject To" or called a "SubTo". Assumption and Subject To are different.

Subject To is the cheapest financing you will find.

That means technically, if ownership, or a part of ownership has changed hands for any reason, or in some contracts "is planned to change hands in the future", the bank has the right to call the loan due. That means they can issue a demand for payback, before the financing term is completed. If that payback isn't timely made, they can force a foreclosure sale.

By the way, being in foreclosure does not mean the borrower has already lost the house. There are remedies, but that's for later.

When a Due On Sale is enforced, the lender must notify the borrower of the violation in writing, stating how to "cure" that particular violation and allow a set amount of time for the borrower to fix the problem or the borrower will lose the house. The house could be being used as a rental and losing the house could violate your agreement with the renter. Or if you had sold it but kept the financing, it could violate your agreement with the buyer. Either way, you could get sued. However, there is a safe way to do these.

Banks do not like to wind up with properties, (called REO, Real Estate Owned) It costs them money and they lose the ability to lend a certain percentage of their assets, which is controlled by the regulators. It looks bad to investors and sometimes loan officers get fired. Banks are all about making lots of money, "safely".

The important part is to note, is that it is not illegal to sell a house using various techniques that violate the Due On Sale clause.

It is smart though, to have a solution ahead of time, for each of the common reasons a note gets called. There are solutions, but these are not areas you want to "guess" at. In 30 years and uncounted properties, I've only had two Due On Sale called. One was in 2008 ( I did something stupid) and one was in 2020. If someone has had more than a couple called, they are doing something wrong and need proper training from someone like us. You avoid poison ivy by not walking in the woods, but you walk in the woods anyway, so just know where the bad stuff is.

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

Another bag of popcorn, please

Private Mortgage Financing Partners, LLC

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Quote from @Ken M.:

For years now, all loans have had a "Due On Sale" clause. That means it has to be paid off when the property changes hands, unless the lender approves an assumption. An assumption is not a "Subject To" or called a "SubTo". Assumption and Subject To are different.

Subject To  is the cheapest financing you will find.

That means technically, if ownership, or a part of ownership has changed hands for any reason, or in some contracts "is planned to change hands in the future", the bank has the right to call the loan due. That means they can issue a demand for payback, before the financing term is completed. If that payback isn't timely made, they can force a foreclosure sale.

By the way, being in foreclosure does not mean the borrower has already lost the house. There are remedies, but that's for later.

When a Due On Sale is enforced, the lender must notify the borrower of the violation in writing, stating how to "cure" that particular violation and allow a set amount of time for the borrower to fix the problem or the borrower will lose the house. The house could be being used as a rental and losing the house could violate your agreement with the renter. Or if you had sold it but kept the financing, it could violate your agreement with the buyer. Either way, you could get sued. However, there is a safe way to do these.

Banks do not like to wind up with properties, (called REO, Real Estate Owned) It costs them money and they lose the ability to lend a certain percentage of their assets, which is controlled by the regulators. It looks bad to investors and sometimes loan officers get fired. Banks are all about making lots of money, "safely".

The important part is to note, is that it is not illegal to sell a house using various techniques that violate the Due On Sale clause.

It is smart though, to have a solution ahead of time, for each of the common reasons a note gets called. There are solutions, but these are not areas you want to "guess" at. In 30 years and uncounted properties, I've only had two Due On Sale called. One was in 2008 ( I did something stupid) and one was in 2020. If someone has had more than a couple called, they are doing something wrong and need proper training from someone like us. You avoid poison ivy by not walking in the woods, but you walk in the woods anyway, so just know where the bad stuff is.
Yeah, Ken there’s a tremendous amount of misinformation, emotionally fueled “opinions”, thinly disguised bias, and general ignorance surrounding subject to transactions.
You’ve done an excellent job of clarifying most of the incorrect information, notably concerning the LEGALITY of violating the “due on sale” provision.
Most of the criticism (at least the more rational criticism) tends to congregate around the disaster that can occur if the new buyer defaults and the sellers limitation on credit capacity. BUT, these criticisms are based on the seller having an alternative of selling to a cash or conventional loan buyer and being relieved of all liability. There are a number of instances where that is NOT a viable alternative. Where the seller has negative or no equity in the property (and can’t provide additional funds to get out” of the loan),where the seller doesn’t have the time available to wait to close, and where the seller seeks maximum sale price for the  property and is able to handle the risks of default.
There are numerous “safeguards” that can be put into play which provide a good amount (NOT 100%) protection to both parties. But that requires full disclosure, attorney working for BOTH parties, and neither party having an undisclosed “nefarious” agenda to “screw” the other party.
Some of the best deals I’ve ever done have been with subject to - I’ve been on both sides.  interestingly, it’s worked well for me in commercial transactions, but that may be because I’m primarily in commercial real estate.

Subject to (especially in INVESTMENT) properties is an area where both sides of the transaction can truly benefit.
Private Mortgage Financing Partners, LLC
Website View Page
1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Don Konipol:
  
  Quote from @Ken M.:
  
  For years now, all loans have had a "Due On Sale" clause. That means it has to be paid off when the property changes hands, unless the lender approves an assumption. An assumption is not a "Subject To" or called a "SubTo". Assumption and Subject To are different.
  
  Subject To  is the cheapest financing you will find.
  
  That means technically, if ownership, or a part of ownership has changed hands for any reason, or in some contracts "is planned to change hands in the future", the bank has the right to call the loan due. That means they can issue a demand for payback, before the financing term is completed. If that payback isn't timely made, they can force a foreclosure sale.
  
  By the way, being in foreclosure does not mean the borrower has already lost the house. There are remedies, but that's for later.
  
  When a Due On Sale is enforced, the lender must notify the borrower of the violation in writing, stating how to "cure" that particular violation and allow a set amount of time for the borrower to fix the problem or the borrower will lose the house. The house could be being used as a rental and losing the house could violate your agreement with the renter. Or if you had sold it but kept the financing, it could violate your agreement with the buyer. Either way, you could get sued. However, there is a safe way to do these.
  
  Banks do not like to wind up with properties, (called REO, Real Estate Owned) It costs them money and they lose the ability to lend a certain percentage of their assets, which is controlled by the regulators. It looks bad to investors and sometimes loan officers get fired. Banks are all about making lots of money, "safely".
  
  The important part is to note, is that it is not illegal to sell a house using various techniques that violate the Due On Sale clause.
  
  It is smart though, to have a solution ahead of time, for each of the common reasons a note gets called. There are solutions, but these are not areas you want to "guess" at. In 30 years and uncounted properties, I've only had two Due On Sale called. One was in 2008 ( I did something stupid) and one was in 2020. If someone has had more than a couple called, they are doing something wrong and need proper training from someone like us. You avoid poison ivy by not walking in the woods, but you walk in the woods anyway, so just know where the bad stuff is.
  Yeah, Ken there’s a tremendous amount of misinformation, emotionally fueled “opinions”, thinly disguised bias, and general ignorance surrounding subject to transactions.
  You’ve done an excellent job of clarifying most of the incorrect information, notably concerning the LEGALITY of violating the “due on sale” provision.
  Most of the criticism (at least the more rational criticism) tends to congregate around the disaster that can occur if the new buyer defaults and the sellers limitation on credit capacity. BUT, these criticisms are based on the seller having an alternative of selling to a cash or conventional loan buyer and being relieved of all liability. There are a number of instances where that is NOT a viable alternative. Where the seller has negative or no equity in the property (and can’t provide additional funds to get out” of the loan),where the seller doesn’t have the time available to wait to close, and where the seller seeks maximum sale price for the  property and is able to handle the risks of default.
  There are numerous “safeguards” that can be put into play which provide a good amount (NOT 100%) protection to both parties. But that requires full disclosure, attorney working for BOTH parties, and neither party having an undisclosed “nefarious” agenda to “screw” the other party.
  Some of the best deals I’ve ever done have been with subject to - I’ve been on both sides.  interestingly, it’s worked well for me in commercial transactions, but that may be because I’m primarily in commercial real estate.
  
  Subject to (especially in INVESTMENT) properties is an area where both sides of the transaction can truly benefit.
  
  Yeah, this post was mainly to fight the concept being promoted that it's safe and okay to buy a property that has long DOM on the MLS, by using Subject To.
  
  If it hasn't sold, that means the property is over priced or a problem property. Either of which tells me, that buying it Subject To and in many cases, borrowing the money for closing costs, is a serious problem for several reasons.
  
  But, it apparently sells memberships to a "community".
  
  I know that many people in high cost states like California, Washington, New York and so on believe that buying non cash flowing problem properties is worth it, because eventually the value will go up. I disagree with that strategy, but anyway, the buyer has to be able to make those payments for an extended length of time, years usually, without a hic up. There is No sense in going broke on a property.
  1 Reply
Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
1y
Some folks over leverage finances, some folks over leverage real estate fantasies...
0 Reply
Ken M.
OP
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
1y
Quote from @Ken M.:

For years now, all loans have had a "Due On Sale" clause. That means it has to be paid off when the property changes hands, unless the lender approves an assumption. An assumption is not a "Subject To" or called a "SubTo". Assumption and Subject To are different.

Subject To is the cheapest financing you will find.

That means technically, if ownership, or a part of ownership has changed hands for any reason, or in some contracts "is planned to change hands in the future", the bank has the right to call the loan due. That means they can issue a demand for payback, before the financing term is completed. If that payback isn't timely made, they can force a foreclosure sale.

By the way, being in foreclosure does not mean the borrower has already lost the house. There are remedies, but that's for later.

When a Due On Sale is enforced, the lender must notify the borrower of the violation in writing, stating how to "cure" that particular violation and allow a set amount of time for the borrower to fix the problem or the borrower will lose the house. The house could be being used as a rental and losing the house could violate your agreement with the renter. Or if you had sold it but kept the financing, it could violate your agreement with the buyer. Either way, you could get sued. However, there is a safe way to do these.

Banks do not like to wind up with properties, (called REO, Real Estate Owned) It costs them money and they lose the ability to lend a certain percentage of their assets, which is controlled by the regulators. It looks bad to investors and sometimes loan officers get fired. Banks are all about making lots of money, "safely".

The important part is to note, is that it is not illegal to sell a house using various techniques that violate the Due On Sale clause.

It is smart though, to have a solution ahead of time, for each of the common reasons a note gets called. There are solutions, but these are not areas you want to "guess" at. In 30 years and uncounted properties, I've only had two Due On Sale called. One was in 2008 ( I did something stupid) and one was in 2020. If someone has had more than a couple called, they are doing something wrong and need proper training from someone like us. You avoid poison ivy by not walking in the woods, but you walk in the woods anyway, so just know where the bad stuff is.

.
What is interesting is this little section:

"18. Transfer of the Property or a Beneficial Interest in Borrower" . . . " means any legal or beneficial interest in the Property, . . . , the intent of which is the transfer of title by Borrower to a purchaser at a future date."

That means ALL of the "solutions" that are offered by the most popular gurus are meaningless

The intent is what they are looking at. And, deeding the property back to the seller is not the solution. That only messes up title. There is a proper solution, but deeding it back is not one.

When you buy Subject To, know what you are doing. Get properly taught.

0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
1y
@Ken M. you promote:
- Buy off-market: ok, obvious reasoning for that, no explanation needed there.
- Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
- Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
Why LWO vs C4D?
LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
Step 1, I 100% get and 0 qualms with, it's just factual.
Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
0 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  1y
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  Some excellent points and excellent questions
  
  For the last 25 years I’ve been ALMOST exclusively in the commercial property space.
  while I’ve not been able to successfully work LWO deals, I’ve been more than a little successful with straight options (on the buy side), and owner finance or owner finance with sub to (on the sell side). In selling sub to you want to obtain a price 10 - 20% over true market value, and sell to the buyer with the best chance of fulfilling the contract. That usually means a user rather than investor, although I’ve done both.
  Private Mortgage Financing Partners, LLC
  Website View Page
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  0 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  “1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.”
  
  ‘WOW…. sometimes I have trouble getting 10% down payment on a sale!
  Private Mortgage Financing Partners, LLC
  Website View Page
  2 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Don Konipol:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  “1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.”
  
  ‘WOW…. sometimes I have trouble getting 10% down payment on a sale!
  
  .
  Lol
  These are people who can't get conventional or FHA lending. There are plenty of people who think they have to use a lender, ( I started out as a loan office and ran into plenty of these) but once you cut through all the restrictions, people will buy.
  
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  0 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better than what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  I’m reaching for the popcorn……going to be entertaining
  
  Private Mortgage Financing Partners, LLC
  Website View Page
  1 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  James we do have to keep in mind Ken is selling a service.. and a training. so there is inherent bias in his posts which is numerous on Sub to threads as we have seen.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  1 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  James we do have to keep in mind Ken is selling a service.. and a training. so there is inherent bias in his posts which is numerous on Sub to threads as we have seen.
  
  Well, this one reads to me like Ken is bashing Pace for selling a blue tonic, calling it snake oil, and saying everyone should buy his orange tonic...... and the ingredients label says snake oil....... Lol.
  It's not even a grey area, what Ken is detailing, it's blatantly illegal in MN. The intent of the transaction is illegal. The work around to tenants rights is unenforceable and the intent of the action around work around to tenants rights or loosing option and option deposit is all unenforceable and illegal.
  5 min with a Real Estate attorney is all it would have taken. They'd have laughed out loud and said "nice try but not a chance guy".
  Depending on how and at what scale one does it, it could be applicable for predatory lending charges, or fraud, theft by swindle almost certainly, and on.....
  I can't keep quiet when a person is selling self as a coach, instructing persons to do actions of very clearly illegal actions. Again, it's not even grey what Ken directed, if a person did that in MN you'd be guilty as sin.
  MN has reciprocity with several states so I gotta imagine it's very similar real estate laws in several locations.
  How about your states Jay, would it legally fly in your states?
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." ** hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  James we do have to keep in mind Ken is selling a service.. and a training. so there is inherent bias in his posts which is numerous on Sub to threads as we have seen.
  
  True and @Jay Hinrichs: sells his projects which you can happily invest in. :-) So, what's your point?
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Don Konipol:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better than what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  I’m reaching for the popcorn……going to be entertaining
  
  "I’m reaching for the popcorn……going to be entertaining"
  
  Great line!
  
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." ** hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  That's cute Ken, the snake-oil salesman saying the "town sheriff" is "lacking ethics" because I called out your blatantly illegal transaction for what it is.
  I couldn't have been any more clear in my citing the laws as MN laws, and not having certainty of how it all applies in other jurisdictions. But I get it, you got caught red-handed and had nothing to stand upon so gotta figure some way to spin Spin SPIN your way out, right.
  As chance has it, being a Real Estate Broker, and having been a Managing Broker, my opinions actually DO carry weight in court. I thought your were some kind of coach or Guru Ken, isn't real estate 101 a necessary knowledge level to be a coach/guru????
  And the law isn't my personal opinion Ken, it's the law. Knowing the law, doesn't morph it into personal opinion, it just makes me informed.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." ** hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  Turns out what your preaching Ken, is also ILLEGAL in Arizona..... https://housing.az.gov/sites/default/files/documents/files/L...
  A LWO is a lease, and with that CANT have any terms of a tenant waiving their tenant rights. And with that taking a $40k option deposit, non-refundable, as a penalty for wanting repairs during lease time, which is a tenant right and a Landlord responsibility; ILLEGAL.
  Just like in MN, in AZ your scheme Ken, is illegal a whole slew of ways.
  In about 5 min I found half a dozen ways it's blatantly unenforceable or out right illegal.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." ** hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  Turns out what your preaching Ken, is also ILLEGAL in Arizona..... https://housing.az.gov/sites/default/files/documents/files/L...
  A LWO is a lease, and with that CANT have any terms of a tenant waiving their tenant rights. And with that taking a $40k option deposit, non-refundable, as a penalty for wanting repairs during lease time, which is a tenant right and a Landlord responsibility; ILLEGAL.
  Just like in MN, in AZ your scheme Ken, is illegal a whole slew of ways.
  In about 5 min I found half a dozen ways it's blatantly unenforceable or out right illegal.
  
  .
  That's rich! A guy from Minnesota telling someone an Arizona practice is illegal.
  First of all, you quote things that weren't said. You fill your argument with half truths.
  
  I'm glad I don't invest in Minnesota, for a reason (or two). :-)
  
  And then you try to fool people and try to support that false assertion by linking to the entire landlord/tenant act. What goes with that? Show the specific violation. It's like saying "it's against the law to outrun a road runner" and then linking to the Wilderness Act.
  
  I'm afraid that just doesn't fly.
  
  You have to link to the SPECIFIC statute and case law to support your argument, and I 'm afraid that doesn't exist. Your "feelings" of what should be legal and illegal just aren't supported by facts. Stick to Minnesota. Also, read up on leases and options.
  
  Oh, and you should actually read what I wrote, but maybe you can't discern
  
  Discern
  "To see and identify by noting a difference or differences; to note the distinctive character of; to discriminate; to distinguish." and "To see by the eye or by the understanding; to perceive and recognize.to discern a difference'
  
  so you lump it all together to try to justify your position.
  
  Sorry, bub, and I rarely say this since I try to be nice, "You're Wrong" full stop. But, we can still debate. ;-)
  
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." ** hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  Turns out what your preaching Ken, is also ILLEGAL in Arizona..... https://housing.az.gov/sites/default/files/documents/files/L...
  A LWO is a lease, and with that CANT have any terms of a tenant waiving their tenant rights. And with that taking a $40k option deposit, non-refundable, as a penalty for wanting repairs during lease time, which is a tenant right and a Landlord responsibility; ILLEGAL.
  Just like in MN, in AZ your scheme Ken, is illegal a whole slew of ways.
  In about 5 min I found half a dozen ways it's blatantly unenforceable or out right illegal.
  
  .
  That's rich! A guy from Minnesota telling someone an Arizona practice is illegal.
  First of all, you quote things that weren't said. You fill your argument with half truths.
  
  I'm glad I don't invest in Minnesota, for a reason (or two). :-)
  
  And then you try to fool people and try to support that false assertion by linking to the entire landlord/tenant act. What goes with that? Show the specific violation. It's like saying "it's against the law to outrun a road runner" and then linking to the Wilderness Act.
  
  I'm afraid that just doesn't fly.
  
  You have to link to the SPECIFIC statute and case law to support your argument, and I 'm afraid that doesn't exist. Your "feelings" of what should be legal and illegal just aren't supported by facts. Stick to Minnesota. Also, read up on leases and options.
  
  Oh, and you should actually read what I wrote, but maybe you can't discern
  
  Discern
  "To see and identify by noting a difference or differences; to note the distinctive character of; to discriminate; to distinguish." and "To see by the eye or by the understanding; to perceive and recognize.to discern a difference'
  
  so you lump it all together to try to justify your position.
  
  Sorry, bub, and I rarely say this since I try to be nice, "You're Wrong" full stop. But, we can still debate. ;-)
  
  Charlatan..... your definitively a charlatan Ken.
  You detailed your scheme. I responded with highlights and summaries of the distortive and illegal practices with it.
  I than linked directly to Arizona statutes of law.
  You respond Ken, with slander, distortion, misrepresentation verging into out right lies.
  End of story. Good day to you Sir.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  Your comment: "I am willing to bet there is more like MN then not" and "it's blatantly illegal in MN" "if a person did that in MN you'd be guilty as sin." **  hilarious
  So don't do it in MN.
  
  But your opinion and Minnesota laws don't fly here. ;-) Get used to it!
  Yes, thank God for many reasons that Arizona and Texas are not Minnesota. Lol
  
  By the way, and this should go without saying, you are selective in your limited processing and never mention that someone should get properly trained and consult an attorney wherever they are going to invest. I have said that so many times, I say it in my sleep. But, lacking ethics, you fail to include fact and that these are local issues.
  I make local recommendations and you should admit I always tell people to check with the attorney that is going to represent them in court. Yes, I've been to court, numerous times and I've always won. I know what passes muster in an area before I engage. :-) Your personal opinion carries no weight in court. Lol
  
  Turns out what your preaching Ken, is also ILLEGAL in Arizona..... https://housing.az.gov/sites/default/files/documents/files/L...
  A LWO is a lease, and with that CANT have any terms of a tenant waiving their tenant rights. And with that taking a $40k option deposit, non-refundable, as a penalty for wanting repairs during lease time, which is a tenant right and a Landlord responsibility; ILLEGAL.
  Just like in MN, in AZ your scheme Ken, is illegal a whole slew of ways.
  In about 5 min I found half a dozen ways it's blatantly unenforceable or out right illegal.
  
  .
  That's rich! A guy from Minnesota telling someone an Arizona practice is illegal.
  First of all, you quote things that weren't said. You fill your argument with half truths.
  
  I'm glad I don't invest in Minnesota, for a reason (or two). :-)
  
  And then you try to fool people and try to support that false assertion by linking to the entire landlord/tenant act. What goes with that? Show the specific violation. It's like saying "it's against the law to outrun a road runner" and then linking to the Wilderness Act.
  
  I'm afraid that just doesn't fly.
  
  You have to link to the SPECIFIC statute and case law to support your argument, and I 'm afraid that doesn't exist. Your "feelings" of what should be legal and illegal just aren't supported by facts. Stick to Minnesota. Also, read up on leases and options.
  
  Oh, and you should actually read what I wrote, but maybe you can't discern
  
  Discern
  "To see and identify by noting a difference or differences; to note the distinctive character of; to discriminate; to distinguish." and "To see by the eye or by the understanding; to perceive and recognize.to discern a difference'
  
  so you lump it all together to try to justify your position.
  
  Sorry, bub, and I rarely say this since I try to be nice, "You're Wrong" full stop. But, we can still debate. ;-)
  
  Charlatan..... your definitively a charlatan Ken.
  You detailed your scheme. I responded with highlights and summaries of the distortive and illegal practices with it.
  I than linked directly to Arizona statutes of law.
  You respond Ken, with slander, distortion, misrepresentation verging into out right lies.
  End of story. Good day to you Sir.
  
  .
  Your comment: "with slander, distortion, misrepresentation verging into out right lies"
  
  I didn't mean to bruise your fragile ego. Telling the truth is never slander. Besides, slander is spoken, we've never spoken. "Slander: a false and defamatory oral statement about a person"
  
  You present a 50 page document instead of pointing to case law or statute, now THAT"S cowardly. :-) There is nothing in that document that addresses the question at hand. The problem is it misleads people. It's dishonest, while I present case filings and statutes when applicable.
  
  But, it does no good to drive it into the ground, just know that you are wrong.
  
  You can't prove you are right, you refuse (or can't) give specifics, and instead of saying " I see your point", you want to take your ball and go home. I had a friend that was like that in fourth grade. Guess what, we are no longer in fourth grade. :-)
  
  and you obviously haven't litigated in Arizona or Texas (I have)
  And fortunately, even in Minnesota, lawyers get to present their cases to the court, not mortgage brokers. Lol
  
  FYI, this isn't for you it's for the lurkers.
  
  I would suggest though, you do a better job of knowing what the law is, before you state it so emphatically.
  
  0 Reply
- Eric James
  Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @Jay Hinrichs:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. you promote:
  - Buy off-market: ok, obvious reasoning for that, no explanation needed there.
  - Buy via Sub2: I assume this is to mitigate $ outlay into securing inventory, correct?
  - Sell via LWO: Why? Why LWO? Is this to "hack" the market for driving buyers where buyers are a bit thin? Or to "hack" the price you get on contract where current market price is a bit lower because your getting buyers chasing their hopeium of being able to buy in those near term years?
  Why LWO vs C4D?
  LWO opens one to all the downsides of tenant laws, and you loose uncapped earning potential because sold a purchase option on it capping self.
  Step 1, I 100% get and 0 qualms with, it's just factual.
  Step 2, ok, it's a method and while I have some qualms with it there all centered around the mechanics of who and how. Done right, 0 issues with it. The rub is so much BS promoting how to do it wrong out there.
  Step 3, the LWO has me confused. Buyers are tenants so held to all that jazz as a landlord, and concerns it drives the wrong kind of tenant/buyer. Making for a setup of non-closing buyers and a revolving door of damage repairs.
  .
  Your question: "Step 3, the LWO has me confused."
  
  It gets a little complicated so I'll try to make sense. When you want to provide financing to a buyer and you want to sell as a seller doing Lease/Options as creative finance:
  
  1. I get 10% non refundable Option Fee upfront - on a $400,000 house, that's $40,000.
  
  2. Yes, under the lease agreement you become a landlord and have all of the landlord responsibilities. However, in the separate document, the Option, the Optionee takes over responsibilities for maintenance & repairs. Now, the landlord/tenant laws generally make the landlord responsible for those items. So, included in the Option is a clause that the Optionee takes full responsibility for the property as though they already own the property. If they violate that maintenance clause, they lose the Option and the nonrefundable option fee. They are still tenants for the term of the lease, but no longer have the Option. Under the Lease agreement, they can still demand that I fulfill the Lease terms and fix the roof, replace the AC, repair the porch, which I will gladly do, but then they lose the Option. (the strategy has not yet been disputed in court, as most people just make the repairs.)
  
  I had a call in Arizona during the summer once, it was 115 degrees, "Hey Ken, the AC broke, will you have it fixed" I said "sure, we always follow the contracts, let me take a look at the Lease and Option agreements" I texted the part from the Option agreement that it is their responsibility to fix the AC, "but I will have it fixed and we will throw away the Option". "The Option fee is nonrefundable". "Which would you like us to do" They said "don't worry, we'll fix it". I bought a floor AC Unit from Lowes and took it over for them to use for the three days it took to for them get someone out to repair the AC. There was no arguing, no confrontation, no problems.
  
  2. When you own a property, you get the tax write offs and depreciation. When you sell a property you pay capital gains. About one out of three of our Lease/Options, "fail" That is, the Optionee decides not to exercise their Option. So, we re-Lease/Option for another 10% Option fee to someone new.
  
  We treat people as grown ups and if they change their mind, it's their decision. We remind them that the Option fee is non-refundable. But we do offer to apply the Option fee to a different property if that is their preference. Any "improvements" they make stay with the house, of course. We remind people every 6 months, that it takes time to put together financing to complete the Option purchase. We document everything. We provide documentation that they paid on time, when they have paid on time.
  
  This is all done by text, which is efficient and gives us documentation on what went on. Yes, I've won court cases based on text documentation. There are other "tricks of the trade" we teach those who want to use this strategy.
  
  This would not fly in Minnesota, not at all.
  State law on tenant rights supersedes any agreement otherwise, and thus you can make any contract you want but second it goes to court the Judge will say it's unenforceable and throw it out.
  Next, a 10% of purchase price Option Fee, wowzers that's expensive. That is way above market rate in MN. That's in-line with C4D down payments.
  And that's the rub, your doing a C4D, but calling it a LWO so you get the tax benefit's of a LWO and the benefits of a C4D. That may go under the radar in some markets but I have 100% certainty the AG's office would catch that right off the bat and then one would have a whole other level of legal hell to deal with. Because next there gonna start pealing the onion of ALL your transactions, even digging into closed ones for past years.
  Minnesota AG's office is no joke, you do NOT want to be a target of theirs. Keep in mind, this is the same group who took down Phillip Morris.
  I don't know enough of the legal in's and out's in every other state but I am willing to bet there is more like MN then not, which would find your work around for tenant laws doesn't hold water and throws that out. And would see straight through what your doing, and open to all the liability from such.
  I say not worth it.
  If gonna do a C4D, just do a dang C4D. Don't try to scam your way around things to squeeze some extra pennies out of it at risk of blowing up your everything.
  Honestly Ken, this is no better then what Pace is doing. Your better then that Ken. Take the high road. Don't try to scheme for every penny ignoring risk and liability exposure. Which BTW, last's for years and years on end even years after a deal is done and closed out. Because all it takes is that 1 instance, and then they dig through history to find every single potential instance for all years they can nail a person for.
  
  James we do have to keep in mind Ken is selling a service.. and a training. so there is inherent bias in his posts which is numerous on Sub to threads as we have seen.
  
  True and @Jay Hinrichs: sells his projects which you can happily invest in. :-) So, what's your point?
  
  Actually, no.
  0 Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Another bag of popcorn, please
Private Mortgage Financing Partners, LLC
Website View Page
6 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  2 Reply
- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  You're absolutely right about Texas - both lease with option to purchase and CFD have been just about eliminated for SFR in Texas. All real estate attorneys I know in Texas won't even partake in a commercial CFD.
  Private Mortgage Financing Partners, LLC
  Website View Page
  2 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Don Konipol:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  You're absolutely right about Texas - both lease with option to purchase and CFD have been just about eliminated for SFR in Texas. All real estate attorneys I know in Texas won't even partake in a commercial CFD.
  
  Ken says he is in Austin.. so I am sure he knows this and does not recommend those for that state.. I assume though you can do straight owner carry just need to use a DT and a note and close escrow and transfer title.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  2 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  .
  @Jay Hinrichs: Your Comment "the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money."
  
  You are correct on that. It's very different from a LWO, which I presume he means Lease with an Option in the same document.
  
  And, it's very important to differentiate "who says what" and to properly attribute the source, something the other commenter seems to have a problem discerning.
  
  If I said "all little boys throw snowballs at little girls", then that would be a lie (if it was intentional) or an incorrect statement (if it was said in ignorance).
  
  Please note, I have always maintained that Subject To is only for sophisticated investors who have money and are properly trained.
  
  (It is someone ELSE on Youtube that advocates buying with little or no money down, and not having money at all) But, that is not me.
  2 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  You're absolutely right about Texas - both lease with option to purchase and CFD have been just about eliminated for SFR in Texas. All real estate attorneys I know in Texas won't even partake in a commercial CFD.
  
  Ken says he is in Austin.. so I am sure he knows this and does not recommend those for that state.. I assume though you can do straight owner carry just need to use a DT and a note and close escrow and transfer title.
  
  Correct, there is/was an attorney on Bigger Pockets in TX that says he will put together Lease Options for TX, but I don't think those are the preferred approach. I don't use them in TX unless it's a very short contract. He though, insists they are legitimate.
  
  I just don't want the drama.
  
  That's actually why I focus on being specific and I emphasize proper training. One size does NOT fit all.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  Hilarious!
  You've gone from just being wrong, to being delusional.
  
  None of what you say is true or accurate. Lol
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  
  @James Hamling: It was fun until you became tedious and boring and silly.
  I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  
  .
  @James Hamling:
  Interesting
  
  So, we have a mortgage broker in Minnesota who doesn't know the difference between a single document Lease/Option and having Separate Lease and Separate Option agreements, telling a Judge in Arizona who reviewed each document, that he, the judge, is wrong. A judge who adjudicated the case involving those very documents in a specific case in Arizona. (Awarding eviction, loss of Option fee and granting judgment amount, plus court costs, to me) My oh my!
  
  Fascinating. The hubris that takes.
  (Hubris: "extreme or excessive pride or dangerous overconfidence and complacency, arrogance")
  Full Stop. An end to this unproductive discussion.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  
  @James Hamling: It was fun until you became tedious and boring and silly.
  I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  LMAO.....
  Let me get this right Ken. You think that if you write a Lease, and a Purchase Option on the same document, that you've opened a vortex in reality and now shazamed that it's no longer a lease, or a purchase option, but some special "Ken" contract that no longer is held to all the rules and regulations of a lease........
  OMG that's hilarious.
  Good luck with that defense in court "But, but, but, your Honor, see, it's on the same paper" LMAO.
  Your so clueless Ken that you don't even comprehend the simplest of things I've said such as instrument etc.. It's now to the point that it's like I'm arguing with a toddler about the legality of driving through red lights. You clearly are so far out of your depth you don't even grasp the things being said.
  Look Ken, a purchase option is 1 set thing in and of itself, legally speaking. You could put it into paper with 50 other things it still is 1 set thing in and of it's own, legally speaking.
  Same goes for a lease.
  A person who sells a property, and does a lease back with buyer, yes, it is now 2 legal instruments, a purchase agreement and a lease. Yes, they are tied together in their terms but each is a legal instrument of their own conveyance of rights, terms, possessions, care, financial duties AND, subject to the laws and regulations of jurisdiction regarding each individual legal instrument.
  A purchase agreement is a legal instrument.
  A lease is a legal instrument.
  And now your changing things up talking about a Lease Option, when we were talking about LWO Lease with Purchase Option. We never spoke about Lease options, those are a totally different thing.
  And for the 3rd time I am NOT a Mortgage Broker, it's literally right there in front of your face REAL ESTATE broker. Do you not know the difference of the 2?
  Lol, and again, all this as Ken markets himself as some "coach" for real estate....
  Ok, this is into pointless land now, Ken's just going to keep throwing out distortions, misrepresentations, more lies and spin with no end. Ok Ken, you have fun with that.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  
  @James Hamling: It was fun until you became tedious and boring and silly.
  I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  LMAO.....
  Let me get this right Ken. You think that if you write a Lease, and a Purchase Option on the same document, that you've opened a vortex in reality and now shazamed that it's no longer a lease, or a purchase option, but some special "Ken" contract that no longer is held to all the rules and regulations of a lease........
  OMG that's hilarious.
  Good luck with that defense in court "But, but, but, your Honor, see, it's on the same paper" LMAO.
  Your so clueless Ken that you don't even comprehend the simplest of things I've said such as instrument etc.. It's now to the point that it's like I'm arguing with a toddler about the legality of driving through red lights. You clearly are so far out of your depth you don't even grasp the things being said.
  Look Ken, a purchase option is 1 set thing in and of itself, legally speaking. You could put it into paper with 50 other things it still is 1 set thing in and of it's own, legally speaking.
  Same goes for a lease.
  A person who sells a property, and does a lease back with buyer, yes, it is now 2 legal instruments, a purchase agreement and a lease. Yes, they are tied together in their terms but each is a legal instrument of their own conveyance of rights, terms, possessions, care, financial duties AND, subject to the laws and regulations of jurisdiction regarding each individual legal instrument.
  A purchase agreement is a legal instrument.
  A lease is a legal instrument.
  And now your changing things up talking about a Lease Option, when we were talking about LWO Lease with Purchase Option. We never spoke about Lease options, those are a totally different thing.
  And for the 3rd time I am NOT a Mortgage Broker, it's literally right there in front of your face REAL ESTATE broker. Do you not know the difference of the 2?
  Lol, and again, all this as Ken markets himself as some "coach" for real estate....
  Ok, this is into pointless land now, Ken's just going to keep throwing out distortions, misrepresentations, more lies and spin with no end. Ok Ken, you have fun with that.
  .
  @James Hamling:
  Interesting
  
  So, we have a mortgage broker in Minnesota who doesn't know the difference between a single document Lease/Option and having Separate Lease and Separate Option agreements, telling a Judge in Arizona who reviewed each document, that he, the judge, is wrong. A judge who adjudicated the case involving those very documents in a specific case in Arizona. (Awarding eviction, loss of Option fee and granting judgment amount, plus court costs, to me) My oh my!
  
  Fascinating. The hubris that takes.
  (Hubris: "extreme or excessive pride or dangerous overconfidence and complacency, arrogance")
  Full Stop. An end to this unproductive discussion.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  .
  @James Hamling: It was fun until you've became tedious and boring and silly.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  Ken, STOP distorting!
  Your promoting a LWO; LEASE with option.
  Hence, your a landlord. Hence, Landlord/Tenant ACT applies, DIRECTLY.
  I've only explained this at great detail multiple times, linked the laws. And all you can say is "aaaah, prove it, PROVE IT, no, don't just prove it, RUB MY FACE IN IT, no, don't just rub my face in it, ram it up my nostrils!"
  Such a Charlatan.....
  
  @James Hamling: It was fun until you became tedious and boring and silly.
  I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  Again, please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  LMAO.....
  Let me get this right Ken. You think that if you write a Lease, and a Purchase Option on the same document, that you've opened a vortex in reality and now shazamed that it's no longer a lease, or a purchase option, but some special "Ken" contract that no longer is held to all the rules and regulations of a lease........
  OMG that's hilarious.
  Good luck with that defense in court "But, but, but, your Honor, see, it's on the same paper" LMAO.
  Your so clueless Ken that you don't even comprehend the simplest of things I've said such as instrument etc.. It's now to the point that it's like I'm arguing with a toddler about the legality of driving through red lights. You clearly are so far out of your depth you don't even grasp the things being said.
  Look Ken, a purchase option is 1 set thing in and of itself, legally speaking. You could put it into paper with 50 other things it still is 1 set thing in and of it's own, legally speaking.
  Same goes for a lease.
  A person who sells a property, and does a lease back with buyer, yes, it is now 2 legal instruments, a purchase agreement and a lease. Yes, they are tied together in their terms but each is a legal instrument of their own conveyance of rights, terms, possessions, care, financial duties AND, subject to the laws and regulations of jurisdiction regarding each individual legal instrument.
  A purchase agreement is a legal instrument.
  A lease is a legal instrument.
  And now your changing things up talking about a Lease Option, when we were talking about LWO Lease with Purchase Option. We never spoke about Lease options, those are a totally different thing.
  And for the 3rd time I am NOT a Mortgage Broker, it's literally right there in front of your face REAL ESTATE broker. Do you not know the difference of the 2?
  Lol, and again, all this as Ken markets himself as some "coach" for real estate....
  Ok, this is into pointless land now, Ken's just going to keep throwing out distortions, misrepresentations, more lies and spin with no end. Ok Ken, you have fun with that.
  
  .
  @James Hamling: ???????
  
  Your comment "Let me get this right Ken. You think that if you write a Lease, and a Purchase Option on the same document, that you've opened a vortex in reality and now shazamed that it's no longer a lease, or a purchase option, but some special "Ken" contract that no longer is held to all the rules and regulations of a lease........"
  
  Actually, that is the exact opposite of what I said!
  
  Are you Dyslexic? I'm not trying to be unkind here. I am sincere in asking, since Dyslexia is nothing to make fun of, but it would explain your erratic answers.
  
  The alternative answer though is indeed unkind, it would mean that for ego purposes, you intentionally misstate what someone has said, so you can mock them. That of course is called cruelty. I would not like to think that you are a cruel man, simply to be mean. (Cruel: Disposed to give pain to others; willing or pleased to hurt, torment, or afflict; destitute of sympathetic kindness and pity; savage; inhuman; hard-hearted; merciless.)
  
  I am perplexed at this point, since your responses are irrational to the subject. Please indicate if you have a reading or comprehension difficulty.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Don Konipol:
  
  Another bag of popcorn, please
  
  Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years. I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely. ..
  
  I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.
  
  Correct, LWO is 2 separate instruments: The lease and then the purchase option.
  Even if someone trys to jazz up the 2 on 1 same contract, or commingle them as ken detailed, there 2 separate instruments and 1 does not negate the other.
  Ken detailed he's promoting a scheme where if a tenant/buyer requests a LWO seller to perform on their landlord duties as legally required, that it then automatically cancels the purchase option and all deposit funds are forfeit as non refundable.
  Ken referenced Texas and Arizona, inferring as his markets of deployment and operation for this scheme.
  So I linked the Arizona applicable laws for Ken, from the state of Arizona itself. Which ken clearly dislikes. Possibly because it's really clear in the multitude of ways his scheme is illegal in Arizona.
  Next Ken decided Arizonas laws are apparently my opinions..... I had no idea I had such power.
  And then declared me a Mortgage broker, even though I explicitly stated I am a Real Estate Broker and it's, ya know, literally tagged right here along my name..... But hey, I give Ken credit for consistency in his accuracy, or should I say lack there of.
  It was never on SubTo, just some hair brained scheme ken concocted with LWO's.
  Which as Ken detailed it, was blatant Theft By Swindle, at least that's what it falls under in MN. In Arizona it would be Theft by Misrepresentation. In Texas, Theft by Deception.
  A Purchase Option is an equitable interest in real estate, ie valuable property. And taking of such through any kind of deceptive practice or action, well, that's illegal. As well as breaking other laws at same time, such as trying to con a tenant to waive their tenants rights, reprisals against tenants for requests of landlord to do landlord required actions.....
  You can't tell a tenant they loose their purchase option and $40k Ken if during the lease something breaks on the home and they ask you to get it repaired, such as the a/c. Which is exactly what you said you do/did and teach others to do.
  
  .
  @James Hamling: You really shouldn't get personal, it will get you kicked off the forums. You are welcome to copy what I have written to quote me, but your false accusations border on Libel.
  
  0 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
1y
I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
Podcast Guest on Show #121
0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  .
  Your comment: "I have never seen a bank call a Due on Sales Clause on a performing loan"
  
  That would be very rare, but Pace Morby in May said he had 10 called this year (2025). If I can find his post, I will note it here.
  It's my experience and my opinion that he was doing something wrong. It becomes concerning for those who follow his teaching, in my opinion.
  
  1 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..
  You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..
  Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one. And we just used the sub to as a short term option while we stabilized and resold for profit Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)
  Podcast Guest on Show #222
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- Don KonipolBusiness Member
  Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
  1y
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  Private Mortgage Financing Partners, LLC
  Website View Page
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  .
  I found the part where Pace Morby had 10 due on sale called, it looks like it was as of a year ago. He hasn't posted about Due On Sale since that I've seen, so not sure how many since.
  
  www youtube.com/watch?v=W60Ytz4Wb5U
  
  Just add the period after www.
  
  When I looked this up last year, (it's part of Maricopa County records) he seems to have taken out a $3,000,000 loan and paid those off. He advocates "deed the property back to the seller" Well, either he doesn't follow his own advice, or it didn't work.
  
  He does go on to say that a dozen of his students have reported getting the Due on Sale within their Land Trusts, in addition to his 10 current. He also says in the same video that he has 20,000 paid students, however he is in another video saying he has 3,800 paid students.
  
  So, the moral is, be in a position to pay of the loans if you try doing Subject To and deeding back the property does Not undo the damage. The Due On Sale has still been violated.
  
  0 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  Podcast Guest on Show #121
  2 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..
  You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..
  Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one. And we just used the sub to as a short term option while we stabilized and resold for profit Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)
  Was this relatively recently? I figured banks would start doing this with sub-2s that have a rate in the 2s and 3s when rates right now are in the mid 6s.
  Podcast Guest on Show #121
  0 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  .
  Your comment: "I have never seen a bank call a Due on Sales Clause on a performing loan"
  
  That would be very rare, but Pace Morby in May said he had 10 called this year (2025). If I can find his post, I will note it here.
  It's my experience and my opinion that he was doing something wrong. It becomes concerning for those who follow his teaching, in my opinion.
  
  10! How many has he done? I understand why it would be more common now with the spread between pre 2023 loans and current interest rates so high. But that sounds ridiculous
  Podcast Guest on Show #121
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Ken M.:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  .
  Your comment: "I have never seen a bank call a Due on Sales Clause on a performing loan"
  
  That would be very rare, but Pace Morby in May said he had 10 called this year (2025). If I can find his post, I will note it here.
  It's my experience and my opinion that he was doing something wrong. It becomes concerning for those who follow his teaching, in my opinion.
  
  10! How many has he done? I understand why it would be more common now with the spread between pre 2023 loans and current interest rates so high. But that sounds ridiculous
  Normally, the only reason a bank calls a Note is for lack of payment.
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  Normally, the only reason a bank calls a Note is for lack of payment.
  And of the notes called (and suits) against you, Ken, how many were for lack of payment?
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..
  You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..
  Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one. And we just used the sub to as a short term option while we stabilized and resold for profit Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)
  Was this relatively recently? I figured banks would start doing this with sub-2s that have a rate in the 2s and 3s when rates right now are in the mid 6s.
  
  2006 ish
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
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- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @Andrew Syrios:
  
  Quote from @Ken M.:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  .
  Your comment: "I have never seen a bank call a Due on Sales Clause on a performing loan"
  
  That would be very rare, but Pace Morby in May said he had 10 called this year (2025). If I can find his post, I will note it here.
  It's my experience and my opinion that he was doing something wrong. It becomes concerning for those who follow his teaching, in my opinion.
  
  10! How many has he done? I understand why it would be more common now with the spread between pre 2023 loans and current interest rates so high. But that sounds ridiculous
  Normally, the only reason a bank calls a Note is for lack of payment.
  
  My notes that were called were from alienating the title ( transferring title to someone not affiliated with the original loan ME :) )
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  1 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Normally, the only reason a bank calls a Note is for lack of payment.
  And of the notes called (and suits) against you, Ken, how many were for lack of payment?
  I've had two Due On Sale called in 30 years. One in 2008 on a house I bought in 2001. It was 7 years later. It's a very strange circumstance that probably no one else will ever encounter. But it was being paid on time. The lender verified that in court. The conflict was that the house had gone up in value over time and the seller was trying to strong arm getting the new equity. The court didn't accept his arguments, I had been paying on time. The lender said it was Due On Sale, but couldn't explain why they were taking the payments for years and never foreclosed. I won.
  
  The other was a reverse mortgage (payments aren't made on a reverse mortgage, but there is a clause that when the borrower dies or moves out, the loan becomes due) That DOS call was because I had bought several houses and was flipping them. It was sitting vacant because I hadn't gotten to it yet. The house was broken into, occupied by squatters, police were called, police called the lender to have the house "secured".
  
  I received a letter from the lender asking what was going on. I was honest and told them, plus the recorded deed provided my phone number & that ownership had transferred. (So that I would be called if here was a problem) They gave me 30 days to pay off the debt or they'd take it to foreclosure. I simply paid off the loan. Some people make the mistake of trying to hide the transfer. They then don't get notification, because the lender doesn't know about them. And the judge doesn't like games like that.
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  . . . plus the recorded deed provided my phone number & that ownership had transferred. . . Some people make the mistake of trying to hide the transfer.
  ". . . plus the recorded deed provided my phone number & that ownership had transferred. . . Some people make the mistake of trying to hide the transfer."
  ---------------------------------------------------------
  
  So on the other recent thread we were on and you were castigating me for telling the buyer to record his sub2 purchase, you were just blowing smoke?
  
  Jim will remember that thread.
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  . . . plus the recorded deed provided my phone number & that ownership had transferred. . . Some people make the mistake of trying to hide the transfer.
  ". . . plus the recorded deed provided my phone number & that ownership had transferred. . . Some people make the mistake of trying to hide the transfer."
  ---------------------------------------------------------
  
  So on the other recent thread we were on and you were castigating me for telling the buyer to record his sub2 purchase, you were just blowing smoke?
  
  Jim will remember that thread.
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  
  Heh, heh
  No, now I remember. That is a situation where the poster stated he had not followed proper protocol and rather than cloud the title, I suggested he leave it alone, and jettison the deal.
  
  Finally found the post in my massive pile of responses (I didn't realize I'd responded to so many posts) ;-)
  https://www.biggerpockets.com/forums/48/topics/1258546-shoul...
  
  His question was:
  
  "Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default)."
  
  Buying a property in default, using Subject To, causes a confusion of legal issues. He didn't seem to be prepared for the ordeal. It is always imperative that a loan in default be brought current first and foremost.
  
  The possible legal issues include, loan fraud, wire fraud, bank fraud, due on sale (of course), contract violation, Consumer Protection Act violations, Dodd-Frank violations, S.A.F.E. Act violations, defamation of title, unauthorized practice of law. I mean, it just goes on and on.
  
  Since we don't know what he told the seller, the seller's vulnerability status, or the previous history of the loan, there is no way for us to know which direction it would go in a legal confrontation. It would be intriguing to watch, but painful for the buyer.
  
  But for sure, if the property was in foreclosure and the loan wasn't cured, the property would go to sale, the seller's credit would be trashed. If it was a recourse loan, the seller would then owe money which would probably go to collections. The seller would be entitled to sue at least for breaking the contract and probably win. The lawsuit would take a year and a half and run $25,000 to $50,000 for the buyer, and I'm guessing from what he wrote, he'd lose.
  
  In this situation, I surmise that an astute attorney would get the State Attorney General involved to inflict great pain.
  
  There just isn't enough profit to be made on such a property. Ethically, you shouldn't do it the way he did it, anyway.
  
  The best plan is to get trained first, properly execute a purchase & sale agreement, get a Title Report, go through escrow, bring the loan current, and FOR SURE, make every payment on time. And yes, as I always say "Subject To" is legal, when done legally".
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  Heh, heh
  No, now I remember. That is a situation where the poster stated he had not followed proper protocol and rather than cloud the title, I suggested he leave it alone, and jettison the deal.
  
  Finally found the post (I didn't realize I'd responded to so many posts) ;-)
  https://www.biggerpockets.com/forums/48/topics/1258546-shoul...
  His question was:
  "Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default)."
  
  Buying a property in default, using Subject To, causes a confusion of legal issues. He didn't seem to be prepared for the ordeal. It is always imperative that a loan in default be brought current first and foremost.
  The possible legal issues include, loan fraud, wire fraud, bank fraud, due on sale (of course), contract violation, Consumer Protection Act violations, Dodd-Frank violations, S.A.F.E. Act violations, defamation of title, unauthorized practice of law. I mean, it just goes on and on.
  Since we don't know what he told the seller, the seller's vulnerability status, or the previous history of the loan, there is no way for us to know which direction it would go in a legal confrontation. It would be intriguing to watch, but painful for the buyer.
  But for sure, if the property was in foreclosure and the loan wasn't cured, the property would go to sale, the seller's credit would be trashed. If it was a recourse loan, the seller would then owe money which would probably go to collections. The seller would be entitled to sue at least for breaking the contract and probably win. The lawsuit would take a year and a half and run $25,000 to $50,000 for the buyer, and I'm guessing from what he wrote, he'd lose.
  In this situation, I surmise that an astute attorney would get the State Attorney General involved to inflict great pain.
  There just isn't enough profit to be made on such a property. Ethically, you shouldn't do it anyway.
  The best plan is to get trained first, properly execute a purchase & sale agreement, get a Title Report, go through escrow, bring the loan current, and FOR SURE, make every payment on time.
  
  Sing and dance all you want , Ken. You said he should not record the deed. In this thread you said “always” record, and when I called you out on it, you essentially said “prove it.” I just did.
  
  So were you lying then, or are you lying now? Perhaps you’ll blame it on martinis both times?
  
  The original poster in that thread didn’t bring up fraud or anything. You, Ken, are simply a BSer, and you say whatever you think will get you out of trouble for the next X minutes.
  
  And you want people to spend how much on your course? Does it come with an open bar?
  
  By the way, at the end of your latest post, you still don’t say that one should record.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  Heh, heh
  No, now I remember. That is a situation where the poster stated he had not followed proper protocol and rather than cloud the title, I suggested he leave it alone, and jettison the deal.
  
  Finally found the post (I didn't realize I'd responded to so many posts) ;-)
  https://www.biggerpockets.com/forums/48/topics/1258546-shoul...
  His question was:
  "Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default)."
  
  Buying a property in default, using Subject To, causes a confusion of legal issues. He didn't seem to be prepared for the ordeal. It is always imperative that a loan in default be brought current first and foremost.
  The possible legal issues include, loan fraud, wire fraud, bank fraud, due on sale (of course), contract violation, Consumer Protection Act violations, Dodd-Frank violations, S.A.F.E. Act violations, defamation of title, unauthorized practice of law. I mean, it just goes on and on.
  Since we don't know what he told the seller, the seller's vulnerability status, or the previous history of the loan, there is no way for us to know which direction it would go in a legal confrontation. It would be intriguing to watch, but painful for the buyer.
  But for sure, if the property was in foreclosure and the loan wasn't cured, the property would go to sale, the seller's credit would be trashed. If it was a recourse loan, the seller would then owe money which would probably go to collections. The seller would be entitled to sue at least for breaking the contract and probably win. The lawsuit would take a year and a half and run $25,000 to $50,000 for the buyer, and I'm guessing from what he wrote, he'd lose.
  In this situation, I surmise that an astute attorney would get the State Attorney General involved to inflict great pain.
  There just isn't enough profit to be made on such a property. Ethically, you shouldn't do it anyway.
  The best plan is to get trained first, properly execute a purchase & sale agreement, get a Title Report, go through escrow, bring the loan current, and FOR SURE, make every payment on time.
  
  Sing and dance all you want , Ken. You said he should not record the deed. In this thread you said “always” record, and when I called you out on it, you essentially said “prove it.” I just did.
  
  So were you lying then, or are you lying now? Perhaps you’ll blame it on martinis both times?
  
  The original poster in that thread didn’t bring up fraud or anything. You, Ken, are simply a BSer, and you say whatever you think will get you out of trouble for the next X minutes.
  
  And you want people to spend how much on your course? Does it come with an open bar?
  
  By the way, at the end of your latest post, you still don’t say that one should record.
  
  Are you actually @James Hamling: with an alias?
  
  You're exhibiting bizarre behavior like him. If you want to have a reasonable discussion; look it doesn't even have to be logical; but try to make sense, so I can figure out a proper response. I'm sorry that investing is so hard for you, but someone will help you if you want, otherwise you are on your own.
  
  Sigh "Why do * I * attract all the crazies"?
  
  0 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  
  yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..
  You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..
  Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one. And we just used the sub to as a short term option while we stabilized and resold for profit Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)
  Was this relatively recently? I figured banks would start doing this with sub-2s that have a rate in the 2s and 3s when rates right now are in the mid 6s.
  
  2006 ish
  
  That was a very, well, interesting time to be investing in real estate...
  Podcast Guest on Show #121
  0 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  Podcast Guest on Show #121
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  Heh, heh
  No, now I remember. That is a situation where the poster stated he had not followed proper protocol and rather than cloud the title, I suggested he leave it alone, and jettison the deal.
  
  Finally found the post (I didn't realize I'd responded to so many posts) ;-)
  https://www.biggerpockets.com/forums/48/topics/1258546-shoul...
  His question was:
  "Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default)."
  
  Buying a property in default, using Subject To, causes a confusion of legal issues. He didn't seem to be prepared for the ordeal. It is always imperative that a loan in default be brought current first and foremost.
  The possible legal issues include, loan fraud, wire fraud, bank fraud, due on sale (of course), contract violation, Consumer Protection Act violations, Dodd-Frank violations, S.A.F.E. Act violations, defamation of title, unauthorized practice of law. I mean, it just goes on and on.
  Since we don't know what he told the seller, the seller's vulnerability status, or the previous history of the loan, there is no way for us to know which direction it would go in a legal confrontation. It would be intriguing to watch, but painful for the buyer.
  But for sure, if the property was in foreclosure and the loan wasn't cured, the property would go to sale, the seller's credit would be trashed. If it was a recourse loan, the seller would then owe money which would probably go to collections. The seller would be entitled to sue at least for breaking the contract and probably win. The lawsuit would take a year and a half and run $25,000 to $50,000 for the buyer, and I'm guessing from what he wrote, he'd lose.
  In this situation, I surmise that an astute attorney would get the State Attorney General involved to inflict great pain.
  There just isn't enough profit to be made on such a property. Ethically, you shouldn't do it anyway.
  The best plan is to get trained first, properly execute a purchase & sale agreement, get a Title Report, go through escrow, bring the loan current, and FOR SURE, make every payment on time.
  
  Sing and dance all you want , Ken. You said he should not record the deed. In this thread you said “always” record, and when I called you out on it, you essentially said “prove it.” I just did.
  
  So were you lying then, or are you lying now? Perhaps you’ll blame it on martinis both times?
  
  The original poster in that thread didn’t bring up fraud or anything. You, Ken, are simply a BSer, and you say whatever you think will get you out of trouble for the next X minutes.
  
  And you want people to spend how much on your course? Does it come with an open bar?
  
  By the way, at the end of your latest post, you still don’t say that one should record.
  
  Are you actually @James Hamling: with an alias?
  
  You're exhibiting bizarre behavior like him. If you want to have a reasonable discussion; look it doesn't even have to be logical; but try to make sense, so I can figure out a proper response. I'm sorry that investing is so hard for you, but someone will help you if you want, otherwise you are on your own.
  
  Sigh "Why do * I * attract all the crazies"?
  
  I think you will find that quoting one’s words back to him is no one’s idea of bizarre behavior, Ken, and that those claiming so are simply trying to avoid the consequences of their actions.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  They write the contract in general and waive in the specific. Once the relevant (duration) treasury goes above your mortgage rate, I have always found banks open to waiving prepay penalties.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  They write the contract in general and waive in the specific. Once the relevant (duration) treasury goes above your mortgage rate, I have always found banks open to waiving prepay penalties.
  Ok going to ask are treasuries above 4% ?
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  1 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @John Clark:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  They write the contract in general and waive in the specific. Once the relevant (duration) treasury goes above your mortgage rate, I have always found banks open to waiving prepay penalties.
  Ok going to ask are treasuries above 4% ?
  
  Find out by asking your bank if it will waive prepayment penalties.
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Jay Hinrichs:
  
  Quote from @John Clark:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  They write the contract in general and waive in the specific. Once the relevant (duration) treasury goes above your mortgage rate, I have always found banks open to waiving prepay penalties.
  Ok going to ask are treasuries above 4% ?
  
  Find out by asking your bank if it will waive prepayment penalties.
  
  had conversation a few weeks ago and the answer was NO.. :) can only pay 20% of the balance in anyone calender year.
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Please copy here what you are saying I said.
  
  It should say (and probably does say)
  You should always record the deed. You are not required to notify the lender. Those are two different things.
  That is one reason one on one training is advised. Some of these things require careful attention.
  
  What you actually said is below, Ken.
  It's in the "Should I file the Deed, or wait, for some reason..?" thread, Started on 8/26 or thereabouts, about my telling the original poster he should record his unrecorded deed. You objected to that, several times, saying the below:
  
  ---------------------
  
  Ken M, 26 days ago, in response to me: "Yes, it [recording the deed] can harm him a lot.
  He will be asked why he did what he did, and what did he do to mitigate the damage."
  
  Ken M, 24 days ago, in response to me: "Recording raises serious questions. Now, I would never officially suggest that he simply burn the "probably very incriminating deed" and simply tell the seller he is no longer involved in the transaction so the seller can find a proper solution for his foreclosure. But, if he were to do so, the likelihood of this coming back at him is remote. No recorded deed, in fact no deed at all, perfected or defective and the seller has time to correct the problem without relying on an imperfect transaction. . . . . On the other hand, recording the deed establishes a fact pattern worth pursuing. . . .
  
  So, I'm not going to suggest the buyer burn the deed and get out of the deal, but it has interesting options."
  
  Ken M, 23 days ago, in response to me: " Conversely The OP, under my hypothetical scenario that he simply burn the unrecorded deed, has an argument that he doesn't own the property and no one would have evidence to the contrary. It would save him a great deal of litigation. No paper trail. "
  
  Ken M, 23 days ago, in response to me: "The buyer has an unrecorded deed, that he controls. There are no payments, there is no recorded deed, there is nothing showing that the buyer actually bought the house, other than the unrecorded deed. If the buyer were to somehow lose that document, he would have to hire an attorney to prove ownership, the very thing I suggest he avoid. But, if the OP lost that document, it would be difficult to prove he did buy it and in my opinion, in this situation, that would be favorable to the OP. It would keep him out of trouble.
  
  However, if he follows your advice and records, he could wind up like this: Very bad"
  
  Ken M, 23 days ago, in response to me: "Not recording, no lawsuit."
  
  ---------------------------
  
  Too many martinis, Ken?
  Heh, heh
  No, now I remember. That is a situation where the poster stated he had not followed proper protocol and rather than cloud the title, I suggested he leave it alone, and jettison the deal.
  
  Finally found the post (I didn't realize I'd responded to so many posts) ;-)
  https://www.biggerpockets.com/forums/48/topics/1258546-shoul...
  His question was:
  "Though I have the deed, I'm wondering if I should go ahead and 'file it' with the county. I haven't cured the default on the mortgage yet (it was 6 months behind, and in default)."
  
  Buying a property in default, using Subject To, causes a confusion of legal issues. He didn't seem to be prepared for the ordeal. It is always imperative that a loan in default be brought current first and foremost.
  The possible legal issues include, loan fraud, wire fraud, bank fraud, due on sale (of course), contract violation, Consumer Protection Act violations, Dodd-Frank violations, S.A.F.E. Act violations, defamation of title, unauthorized practice of law. I mean, it just goes on and on.
  Since we don't know what he told the seller, the seller's vulnerability status, or the previous history of the loan, there is no way for us to know which direction it would go in a legal confrontation. It would be intriguing to watch, but painful for the buyer.
  But for sure, if the property was in foreclosure and the loan wasn't cured, the property would go to sale, the seller's credit would be trashed. If it was a recourse loan, the seller would then owe money which would probably go to collections. The seller would be entitled to sue at least for breaking the contract and probably win. The lawsuit would take a year and a half and run $25,000 to $50,000 for the buyer, and I'm guessing from what he wrote, he'd lose.
  In this situation, I surmise that an astute attorney would get the State Attorney General involved to inflict great pain.
  There just isn't enough profit to be made on such a property. Ethically, you shouldn't do it anyway.
  The best plan is to get trained first, properly execute a purchase & sale agreement, get a Title Report, go through escrow, bring the loan current, and FOR SURE, make every payment on time.
  
  Sing and dance all you want , Ken. You said he should not record the deed. In this thread you said “always” record, and when I called you out on it, you essentially said “prove it.” I just did.
  
  So were you lying then, or are you lying now? Perhaps you’ll blame it on martinis both times?
  
  The original poster in that thread didn’t bring up fraud or anything. You, Ken, are simply a BSer, and you say whatever you think will get you out of trouble for the next X minutes.
  
  And you want people to spend how much on your course? Does it come with an open bar?
  
  By the way, at the end of your latest post, you still don’t say that one should record.
  
  Are you actually @James Hamling: with an alias?
  
  You're exhibiting bizarre behavior like him. If you want to have a reasonable discussion; look it doesn't even have to be logical; but try to make sense, so I can figure out a proper response. I'm sorry that investing is so hard for you, but someone will help you if you want, otherwise you are on your own.
  
  Sigh "Why do * I * attract all the crazies"?
  
  I think you will find that quoting one’s words back to him is no one’s idea of bizarre behavior, Ken, and that those claiming so are simply trying to avoid the consequences of their actions.
  .
  You now have permission to invest in anyway way you see fit and to suffer the consequences.
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  .
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, and can't know that is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes, but is not limited to, not bringing the loan current when you buy a property Subject To ? There are plenty of stupid things to do using Subject To, and this is only one."
  
  Okay, consider it corrected. Thanks for the enlightenment. Now, everyone whoever reads Bigger Pockets will know.
  Actually, it's details like this that makes training "one on one" for a full year, valuable. People misunderstand and there are nuances. Each deal is different with creative finance. If I'm involved from the beginning, it goes well. If I or anyone, has to step in to solve a problem, it gets more difficult and tedious and dangerous.
  
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  1 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  .
  Yes @James Hamling: You are manipulative, we agree on that
  
  But you made some serious accusations, and I am simply asking you to support your libelous and intentionally defamatory statements.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  or, stop being libelous and no, ignoring the issue won't make it go away. That is so 4th grade.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  .
  Yes @James Hamling: You are manipulative, we agree on that
  
  But you made some serious accusations, and I am simply asking you to support your libelous and intentionally defamatory statements.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  or, stop being libelous and no, ignoring the issue won't make it go away. That is so 4th grade.
  
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  .
  Yes @James Hamling: You are manipulative, we agree on that
  
  But you made some serious accusations, and I am simply asking you to support your libelous and intentionally defamatory statements.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  or, stop being libelous and no, ignoring the issue won't make it go away. That is so 4th grade.
  
  .
  @James Hamling: Actually I thought you were better than this, but maybe not.
  
  You never see any of the Pros on BP, and there are many, acting like you're acting.
  
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  .
  Yes @James Hamling: You are manipulative, we agree on that
  
  But you made some serious accusations, and I am simply asking you to support your libelous and intentionally defamatory statements.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  or, stop being libelous and no, ignoring the issue won't make it go away. That is so 4th grade.
  
  .
  @James Hamling: Actually I thought you were better than this, but maybe not.
  
  You never see any of the Pros on BP, and there are many, acting like you're acting.
  
  I gave a clear, concise explanation of things, of the illegality/not-legal actions of your scheme.
  
  Clear enough where @Don Konipol readily gave a recap of it.
  
  After your reply that it's only illegal/not-legal actions in MN, and allowed in AZ, I gave a link to the laws of AZ, on an official AZ site, and I detailed how your incorrect, that it is equally not legal actions in AZ.
  
  Than you, Ken, respond with Gaslighting and Trolling. Repetitively.
  
  Gaslighting to the extent of responding to the link to AZ law on this, demanding I cite AZ law on it, lol.
  
  It's sad because I agree and appreciate a fair bit of what you speak on Sub2, but this fundamental charter flaw of yours Ken, to Gaslight vs debate, it's beyond repair.
  
  So I sentence you to silence hence forth. You're dead to me.
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, and can't know that is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes, but is not limited to, not bringing the loan current when you buy a property Subject To ? There are plenty of stupid things to do using Subject To, and this is only one."
  
  Okay, consider it corrected. Thanks for the enlightenment. Now, everyone whoever reads Bigger Pockets will know.
  Actually, it's details like this that makes training "one on one" for a full year, valuable. People misunderstand and there are nuances. Each deal is different with creative finance. If I'm involved from the beginning, it goes well. If I or anyone, has to step in to solve a problem, it gets more difficult and tedious and dangerous.
  
  No, Ken. Your setting up a straw man about me doesn't work.
  
  I said to always record, as that if there were problems with one's purchase, a refusal to record was not going to save the buyer, and in fact might cause problems. If there were problems and one did record, one got a seat at the table and could protect one's interests.
  
  If there were no problems with one's purchase, recording protected one's interests, and if one didn't record, the bank could foreclose your interests without you having advanced notice. Additionally, the seller could notify the bank of your existence and then you are brought in, late, kicking, and screaming, to defend your interests.
  
  Then, in the latter scenario, the bank beats you over the head with the fact that you refused to record, which delays matters and costs you money -- even if you win.
  
  You already posted that the second scenario happened to you, so there was no advantage to not recording. It didn't save you from anything.
  
  As a lawyer, Ken, I will give you a piece of legal advice which is particularly true when equitable interests are involved: If one's business model depends on concealing fact, it is wrong.
  
  Therefore one records.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  If you can't distinguish between actions in investing that are taken when proper procedures are followed, versus actions to avoid disaster when proper procedures aren't followed, you will have an interesting experience.
  
  Advice to avoid disaster is almost always different than advice that is considered "the norm".
  
  Sing and dance all you want, Ken, but you told the poster in the other thread to not record, and I pointed out that he should record, and recording would not harm him. If he was going to have trouble, he would not avoid it by not recording.
  
  In this thread you say to always record.
  
  I bet you make your martinis extra strong.
  
  .
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes not bringing the loan current when you buy a property Subject To" ?
  
  Okay, consider it corrected. Thanks for the enlightenment.
  Ken: "Okay, consider it corrected. Thanks for the enlightenment."
  @James Hamling: Good to have you back to the conversation
  
  "I'm sorry for you (and for your clients) about your ignorance that a separate lease with a separate option is not the same legally, as a Lease Option in the same document. But it is not my job to train you.
  
  AGAIN - Please finally answer so we can move on (Request Number 5)
  
  Please provide the Statute you reference.
  
  You provided a link to the ENTIRE Landlord/Tenant ACT which has nothing in it about buying properties. As though somehow we are supposed to find something.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  .
  Yes @James Hamling: You are manipulative, we agree on that
  
  But you made some serious accusations, and I am simply asking you to support your libelous and intentionally defamatory statements.
  
  A statute has ten or fifteen lines. It's a simple, sometimes "clear" statement with a citation number.
  Please provide the specific citation number you claim exists so we can see it.
  
  or, stop being libelous and no, ignoring the issue won't make it go away. That is so 4th grade.
  
  .
  @James Hamling: Actually I thought you were better than this, but maybe not.
  
  You never see any of the Pros on BP, and there are many, acting like you're acting.
  
  I gave a clear, concise explanation of things, of the illegality/not-legal actions of your scheme.
  
  Clear enough where @Don Konipol readily gave a recap of it.
  
  After your reply that it's only illegal/not-legal actions in MN, and allowed in AZ, I gave a link to the laws of AZ, on an official AZ site, and I detailed how your incorrect, that it is equally not legal actions in AZ.
  
  Than you, Ken, respond with Gaslighting and Trolling. Repetitively.
  
  Gaslighting to the extent of responding to the link to AZ law on this, demanding I cite AZ law on it, lol.
  
  It's sad because I agree and appreciate a fair bit of what you speak on Sub2, but this fundamental charter flaw of yours Ken, to Gaslight vs debate, it's beyond repair.
  
  So I sentence you to silence hence forth. You're dead to me.
  .
  No, you actually obfuscated, demeaned, libeled and avoided, but you didn't provide a reference to support your alleged violation. As though since you believed it to be true, it must be true.
  
  I've actually litigated the issue in front of a real judge and you called him a liar.
  
  Your comment: "I gave a link to the laws of AZ, on an official AZ site"
  For the record, you linked to a 50 page document of the Landlord/Tennant laws which neither supports your assertion nor provide clarity on the issue.
  
  @Don Konipol is capable of speaking for himself and he wisely is just having fun watching the show. Don't drag him into it unless he wants to join the party.
  
  So, once again for the eighth time, please provide the specific citation of law so we can see what you are "referencing".
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, and can't know that is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes, but is not limited to, not bringing the loan current when you buy a property Subject To ? There are plenty of stupid things to do using Subject To, and this is only one."
  
  Okay, consider it corrected. Thanks for the enlightenment. Now, everyone whoever reads Bigger Pockets will know.
  Actually, it's details like this that makes training "one on one" for a full year, valuable. People misunderstand and there are nuances. Each deal is different with creative finance. If I'm involved from the beginning, it goes well. If I or anyone, has to step in to solve a problem, it gets more difficult and tedious and dangerous.
  
  No, Ken. Your setting up a straw man about me doesn't work.
  
  I said to always record, as that if there were problems with one's purchase, a refusal to record was not going to save the buyer, and in fact might cause problems. If there were problems and one did record, one got a seat at the table and could protect one's interests.
  
  If there were no problems with one's purchase, recording protected one's interests, and if one didn't record, the bank could foreclose your interests without you having advanced notice. Additionally, the seller could notify the bank of your existence and then you are brought in, late, kicking, and screaming, to defend your interests.
  
  Then, in the latter scenario, the bank beats you over the head with the fact that you refused to record, which delays matters and costs you money -- even if you win.
  
  You already posted that the second scenario happened to you, so there was no advantage to not recording. It didn't save you from anything.
  
  As a lawyer, Ken, I will give you a piece of legal advice which is particularly true when equitable interests are involved: If one's business model depends on concealing fact, it is wrong.
  
  Therefore one records.
  
  I respectfully disagree. If one knows there is a rattle snake in the trail, one changes course. The matter at hand is to either bring the loan current and record OR to get out of the deal before you wind up in court.
  
  Now, you haven't said you practice law in Arizona or where ever he said the property was, I forget, but unless you litigate and make money doing so, a reputable attorney would never tell his client to take that kind of risk.
  
  0 Reply
- John Clark
  Member since 2018 · 1k+ posts · 1k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, and can't know that is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes, but is not limited to, not bringing the loan current when you buy a property Subject To ? There are plenty of stupid things to do using Subject To, and this is only one."
  
  Okay, consider it corrected. Thanks for the enlightenment. Now, everyone whoever reads Bigger Pockets will know.
  Actually, it's details like this that makes training "one on one" for a full year, valuable. People misunderstand and there are nuances. Each deal is different with creative finance. If I'm involved from the beginning, it goes well. If I or anyone, has to step in to solve a problem, it gets more difficult and tedious and dangerous.
  
  No, Ken. Your setting up a straw man about me doesn't work.
  
  I said to always record, as that if there were problems with one's purchase, a refusal to record was not going to save the buyer, and in fact might cause problems. If there were problems and one did record, one got a seat at the table and could protect one's interests.
  
  If there were no problems with one's purchase, recording protected one's interests, and if one didn't record, the bank could foreclose your interests without you having advanced notice. Additionally, the seller could notify the bank of your existence and then you are brought in, late, kicking, and screaming, to defend your interests.
  
  Then, in the latter scenario, the bank beats you over the head with the fact that you refused to record, which delays matters and costs you money -- even if you win.
  
  You already posted that the second scenario happened to you, so there was no advantage to not recording. It didn't save you from anything.
  
  As a lawyer, Ken, I will give you a piece of legal advice which is particularly true when equitable interests are involved: If one's business model depends on concealing fact, it is wrong.
  
  Therefore one records.
  
  I respectfully disagree. If one knows there is a rattle snake in the trail, one changes course. The matter at hand is to either bring the loan current and record OR to get out of the deal before you wind up in court.
  
  Now, you haven't said you practice law in Arizona or where ever he said the property was, I forget, but unless you litigate and make money doing so, a reputable attorney would never tell his client to take that kind of risk.
  
  Not being a lawyer Ken, you know nothing about what a lawyer, reputable or otherwise, would advise. I do. Know your place.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  Quote from @John Clark:
  
  Quote from @Ken M.:
  
  So, in your world, I should have said
  
  "always record, unless you've done something stupid that you don't realize is stupid, and can't know that is stupid, because you weren't smart enough, or you were too cheap to pay for my training and the list of stupid things includes, but is not limited to, not bringing the loan current when you buy a property Subject To ? There are plenty of stupid things to do using Subject To, and this is only one."
  
  Okay, consider it corrected. Thanks for the enlightenment. Now, everyone whoever reads Bigger Pockets will know.
  Actually, it's details like this that makes training "one on one" for a full year, valuable. People misunderstand and there are nuances. Each deal is different with creative finance. If I'm involved from the beginning, it goes well. If I or anyone, has to step in to solve a problem, it gets more difficult and tedious and dangerous.
  
  No, Ken. Your setting up a straw man about me doesn't work.
  
  I said to always record, as that if there were problems with one's purchase, a refusal to record was not going to save the buyer, and in fact might cause problems. If there were problems and one did record, one got a seat at the table and could protect one's interests.
  
  If there were no problems with one's purchase, recording protected one's interests, and if one didn't record, the bank could foreclose your interests without you having advanced notice. Additionally, the seller could notify the bank of your existence and then you are brought in, late, kicking, and screaming, to defend your interests.
  
  Then, in the latter scenario, the bank beats you over the head with the fact that you refused to record, which delays matters and costs you money -- even if you win.
  
  You already posted that the second scenario happened to you, so there was no advantage to not recording. It didn't save you from anything.
  
  As a lawyer, Ken, I will give you a piece of legal advice which is particularly true when equitable interests are involved: If one's business model depends on concealing fact, it is wrong.
  
  Therefore one records.
  
  I respectfully disagree. If one knows there is a rattle snake in the trail, one changes course. The matter at hand is to either bring the loan current and record OR to get out of the deal before you wind up in court.
  
  Now, you haven't said you practice law in Arizona or where ever he said the property was, I forget, but unless you litigate and make money doing so, a reputable attorney would never tell his client to take that kind of risk.
  
  Not being a lawyer Ken, you know nothing about what a lawyer, reputable or otherwise, would advise. I do. Know your place.
  
  .
  
  Well, my neighborhood is stacked with attorneys, judges, and DOJ. Parties are this kind of fun. Lots of discussion on what's going on and what should be done, along with why some things get through the process.
  
  1. Do you practice law in Arizona?
  
  2. Have you litigated a case where the Subject To buyer bought a pre-foreclosure, didn't get a Title Report. didn't use Escrow, and who knows what he promised or what he used for a purchase and sale agreement, he doesn't know what to do next, may not have funds to bring the loan current, doesn't know if the seller is a "vulnerable person" and on and on and you advise that he record??. YIKES!! Actually, DOUBLE YIKES!!!
  
  Please give a case you litigated on this subject and the case number you won, so we can see your "expertise" at work.
  
  Everybody is an "expert" until you ask for the case they litigated.
  
  Sorry, theory doesn't fly when you are on the witness stand. Some people on the thread may believe you because they fool easily. I don't. Judges want case law, proof and logical arguments. You haven't presented any yet (for any jurisdiction whatsoever.)
  
  Martindale-Hubbell shows only one John Clark PLC in Arizona, and he practices Trusts and Estates,
  which hardly qualifies for litigating Real Estate and Subject To.
  That's like saying because I pet cats, I can tame tigers. Wishful thinking and dangerous.
  0 Reply
- Andrew SyriosPro Member
  Moderator
  Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
  1y
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  Well those prepayment penalties are all put in place when the loan is originated. And since the issue here is that interest rates have risen dramatically since those loans were originated, they probably would get rid of the prepayment penalties on such loans if they could redo them. Indeed, I'd be interested to know if banks are more willing to wave them after the fact if borrowers express interest in possibly refinancing those pre-2023 loans. I bet they are more willing to do so.
  Podcast Guest on Show #121
  0 Reply
- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  Well those prepayment penalties are all put in place when the loan is originated. And since the issue here is that interest rates have risen dramatically since those loans were originated, they probably would get rid of the prepayment penalties on such loans if they could redo them. Indeed, I'd be interested to know if banks are more willing to wave them after the fact if borrowers express interest in possibly refinancing those pre-2023 loans. I bet they are more willing to do so.
  
  just went through this on a 10 unit we bought and financed with one of my commercial banks in Oregon.. they will waive pre pay if we refi with THEM.. but if we go somewhere else NO.. But I am sure this is simply case by case .. What kind of relationship one might have with a bank holding your paper.. Do you have millions on deposit.. or just an account to pay the bills type of thing.. I think commercial banks look at the global picture..
  Podcast Guest on Show #222
  JLH Capital Partners51 Review
  Website View Page
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Jay Hinrichs:
  
  Quote from @Andrew Syrios:
  
  Quote from @Don Konipol:
  
  Quote from @Andrew Syrios:
  
  I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to?
  Yes, I’ve seen it done a number of times, but more come in the commercial arena. More common with private lenders, or banking institutions where pressure is being applied by regulatory authorities
  
  That makes perfect sense. I could definitely see commercial loans (where the bank presumes the buyer could pay it off) and private lenders calling them much more than a bank calling a performing residential loan. I also figured it would be much more likely now when rates are in the mid 6s and many subject to loans are in the 2s and 3s vs the post-2008 phase when the loans being assumed generally had higher rates than the loans being originated even though basically no new loans were being originated.
  
  I dont think rates play into like your thinking.. so many notes are sold to servicing companies so payoffs are not good for them.
  That makes sense but I will still think rates play some part of it, at least for portfolio'd loans. I would think if I had a 3% fixed loan that got subject to'd I would be tempted to call the loan.
  
  tend to agree on portfolio loans. But then why on many of the commercial loans are there pre pay penalties ??? I will have this conversation with my Banker and ask him for instance on a commercial loan I have at about 4% why I cant just pay it off without a big fat pentalty. ? Right ?
  I suspect Don may know why banks have pre pay penalties on 4% loans today.. One answer might be deals are harder to find so they want to keep thier funds out and working
  Well those prepayment penalties are all put in place when the loan is originated. And since the issue here is that interest rates have risen dramatically since those loans were originated, they probably would get rid of the prepayment penalties on such loans if they could redo them. Indeed, I'd be interested to know if banks are more willing to wave them after the fact if borrowers express interest in possibly refinancing those pre-2023 loans. I bet they are more willing to do so.
  
  @Moderators @Andrew Syrios: One of the posters ( @James Hamling: ) on this thread has become libelous and abusive. I'm not sure what he hopes to accomplish. But he is beginning to become unhinged and threatening.
  
  would you weigh on in if he has gone over the line. Is it Bigger Pockets position that intimidation is the way to growing the platform?
  
  https://www.biggerpockets.com/forums/50/topics/1261738-your-...
  (page 5 of this thread) Now he's treating someone else the same way. Shameful.
  0 Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
What @Ken M. and @James Hamling are “discussing” is an APPLICATION of state (s) law, which in reality would be decided by trial, i.e. judge / jury.
Ken says he’s worked the particular strategy/method he uses a number of times without losing a case in court. This of course doesn’t tell us IF it has been tested in court and if so the outcome; we’d need to read the trial transcript to really understand.
James presents a “theory” of applicable state law and the statutes relevant to such that suggests that the strategy utilized by KEN M may be a violation of said laws or statutes.
What we haven’t discusses is HOW Ken S is able to obtain $40k option fees; the relationship with the renter when he realizes the contract he signed “requires” him to pay for all maintenance and repairs; and the ethical issues, if any of such an “apparently” one sided transaction between a sophisticated, experienced investor and a presumingly naive, inexperienced consumer.
Although I’m. BIG believer in FREE MARKET economics, I would be furious if my inexperienced son or daughter paid their life savings of $40k as an option fee and didn’t understand the implications and nuances of the “deal”. Just my opinion.
Private Mortgage Financing Partners, LLC
Website View Page
2 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Don Konipol:
  
  What @Ken M. and @James Hamling are “discussing” is an APPLICATION of state (s) law, which in reality would be decided by trial, i.e. judge / jury.
  Ken says he’s worked the particular strategy/method he uses a number of times without losing a case in court. This of course doesn’t tell us IF it has been tested in court and if so the outcome; we’d need to read the trial transcript to really understand.
  James presents a “theory” of applicable state law and the statutes relevant to such that suggests that the strategy utilized by KEN M may be a violation of said laws or statutes.
  What we haven’t discusses is HOW Ken S is able to obtain $40k option fees; the relationship with the renter when he realizes the contract he signed “requires” him to pay for all maintenance and repairs; and the ethical issues, if any of such an “apparently” one sided transaction between a sophisticated, experienced investor and a presumingly naive, inexperienced consumer.
  Although I’m. BIG believer in FREE MARKET economics, I would be furious if my inexperienced son or daughter paid their life savings of $40k as an option fee and didn’t understand the implications and nuances of the “deal”. Just my opinion.
  
  .
  Nonsense.
  In a bank loan you have to put $80,000 down. You don't get your $80,000 back if you default on a bank loan.
  
  But here, the $40,000 option fee, or whatever amount is applied to the purchase if they stay in the deal. It's to incentivize them to be serious going in. These are investment properties.
  The buyer has to qualify for purchasing the property the same way he would if he were to use a bank. Dodd-Frank is followed although it's an investment property. Living in an investment property violates the Due On Sale. Well, waddda know, the Due On Sale has already been violated when I bought it Subject To. All transactions have to have a purchase and sale agreement, a title report, be done through escrow, underwriting, have disclosures and are entitled to have an inspection and appraisal. They have 30 days to back out without consequence. It's a specific purchase and sale agreement.
  
  You see, there's more, but if I give away all the sauce, who needs me? :-) Lol
  
  Yes, it has been litigated, and like 98% of lawsuits, it was settled before trial. Yes, they paid ME what I sued them for, (for breach of contract), in this case. They had a very experienced attorney, were not pro se. That attorney agreed they should settle. That's how it went down.
  On another one, they simply stopped paying, took a trip instead since it was the holidays, they felt they "deserved" the trip. Court awarded an eviction and a judgment of about $12,000. Since they had violated the Option, I kept the Option fee. At signing we agreed to that. Of course, the judgment sits uncollected. (as you'd expect)
  On another one, the buyer vacated, took a job in another state, did the right thing and called me. His Option sits in abeyance in case he moves back and will be applied to any property we find for him.
  And it goes on. Yes, I have practical experience in this. (In a couple of different states actually) It is Not theoretical to me nor being confused with laws from some socialist state.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Don Konipol:
  
  What @Ken M. and @James Hamling are “discussing” is an APPLICATION of state (s) law, which in reality would be decided by trial, i.e. judge / jury.
  Ken says he’s worked the particular strategy/method he uses a number of times without losing a case in court. This of course doesn’t tell us IF it has been tested in court and if so the outcome; we’d need to read the trial transcript to really understand.
  James presents a “theory” of applicable state law and the statutes relevant to such that suggests that the strategy utilized by KEN M may be a violation of said laws or statutes.
  What we haven’t discusses is HOW Ken S is able to obtain $40k option fees; the relationship with the renter when he realizes the contract he signed “requires” him to pay for all maintenance and repairs; and the ethical issues, if any of such an “apparently” one sided transaction between a sophisticated, experienced investor and a presumingly naive, inexperienced consumer.
  Although I’m. BIG believer in FREE MARKET economics, I would be furious if my inexperienced son or daughter paid their life savings of $40k as an option fee and didn’t understand the implications and nuances of the “deal”. Just my opinion.
  
  You nailed it pretty succinctly Don.
  My experiences in the court room, as in MN they schedule all housing/tenant related cases in same court room and time blocks so I am not talking just cases I was involved with but those fun-ones I got to be a spectator for.
  In my experiences, the moment a case detailed where a Landlord got a tenant to sign away tenants rights, oh-nelly was the Judge not happy. From there forward you could tell Judge had the notion Landlord was a liar and cheat on everything until evidence to the contrary was shown.
  That's first place I see Ken's scheme going off the rails, he is doing a lease which makes seller a landlord, and then trying to vacate tenant rights laws via agreement. That will loose every-time.
  Second is then assigning financial loss, a reprisal, to the tenant/buyer if and when those tenants rights are enforced. Strike #2. I have 0 doubt there not a snowballs chance in hell that scheme of Ken's would fly with a Judge.
  Third, which is a grey area thats not as cut and dry as the above but with the above, it's a really strong probability, is a seller doing the above getting nailed with some form of Theft by Swindle. Because of intent, and savvy. Seller created the instrument, with knowledge and intent, to deprive tenant/buyer in 1 way or another. And with that, take from buyer/tenant their "property", which in this case is the equitable interest in property, the purchase option, and/or the $.
  $40k for a Purchase option is a wildly exorbitant option fee for something as small and simple as a SFH. That's something more akin to the option fee's paid on large tracts of land, and I do mean large. I have seen that.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @Don Konipol:
  
  What @Ken M. and @James Hamling are “discussing” is an APPLICATION of state (s) law, which in reality would be decided by trial, i.e. judge / jury.
  Ken says he’s worked the particular strategy/method he uses a number of times without losing a case in court. This of course doesn’t tell us IF it has been tested in court and if so the outcome; we’d need to read the trial transcript to really understand.
  James presents a “theory” of applicable state law and the statutes relevant to such that suggests that the strategy utilized by KEN M may be a violation of said laws or statutes.
  What we haven’t discusses is HOW Ken S is able to obtain $40k option fees; the relationship with the renter when he realizes the contract he signed “requires” him to pay for all maintenance and repairs; and the ethical issues, if any of such an “apparently” one sided transaction between a sophisticated, experienced investor and a presumingly naive, inexperienced consumer.
  Although I’m. BIG believer in FREE MARKET economics, I would be furious if my inexperienced son or daughter paid their life savings of $40k as an option fee and didn’t understand the implications and nuances of the “deal”. Just my opinion.
  
  .
  Nonsense.
  In a bank loan you have to put $80,000 down. You don't get your $80,000 back if you default on a bank loan.
  
  But here, the $40,000 option fee, or whatever amount is applied to the purchase if they stay in the deal. These are investment properties.
  The buyer has to qualify for purchasing the property the same way he would if he were to use a bank. Dodd-Frank is followed although it's an investment property. All transactions have to have a purchase and sale agreement, a title report, done through escrow, underwriting, have disclosures and are entitled to have an inspection and appraisal. They have 30 days to back out without consequence. It's a specific purchase and sale agreement.
  
  You see, there's more, but if I give away all the sauce, who needs me? :-) Lol
  
  "In a bank loan you have to put $80,000 down."
  
  Oh BS and you know it!
  
  FHA, 3.5% down. How about VA. Or how about the myriad of down payment assistance and endowments out there, especially when used in conjunction with another low down options.
  
  It's become all but standard today that buyers can be out of pocket as low as 1% at closing. And no, were not talking 1-off or weird janky things, Rocket Mortgage has a program that get's people down to 1%. And there is a slew of others.
  
  0 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
1y
I'm late to the party, but I won't do LTO or contract for deed in Texas.
Due on sales discussion is missing a lot of Fannie loans that have an explicit regulation exempting a transfer to an LLC. But other loans do get called, more so in an increasing interest rate and smaller lenders who keep them on the books
3 Reply
- Joe S.Pro Member
  Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
  1y
  Quote from @Ronald Rohde:
  
  I'm late to the party, but I won't do LTO or contract for deed in Texas.
  Due on sales discussion is missing a lot of Fannie loans that have an explicit regulation exempting a transfer to an LLC. But other loans do get called, more so in an increasing interest rate and smaller lenders who keep them on the books
  
  Due on sales discussion is missing a lot of Fannie loans that have an explicit regulation exempting a transfer to an LLC
  Can you elaborate on this a bit?
  0 Reply
- Ronald RohdePro Member
  Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
  1y
  Quote from @Joe S.:
  
  Quote from @Ronald Rohde:
  
  I'm late to the party, but I won't do LTO or contract for deed in Texas.
  Due on sales discussion is missing a lot of Fannie loans that have an explicit regulation exempting a transfer to an LLC. But other loans do get called, more so in an increasing interest rate and smaller lenders who keep them on the books
  
  Due on sales discussion is missing a lot of Fannie loans that have an explicit regulation exempting a transfer to an LLC
  Can you elaborate on this a bit?
  
  D1-4.1-02, Allowable Exemptions Due to the Type of Transfer
  
  Can transfer to
  
  a limited liability company (LLC), provided that single member controls, same use, etc.
  
  https://servicing-guide.fanniemae.com/svc/d1-4.1-02/allowabl...
  
  3 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
1y
The first paragraph of this is a false premise - "That means it has to be paid off when the property changes hands, unless the lender approves an assumption."
This is generally not true. A more accurate statement is:
"The lender has the option to call the note due."
I would bet that several million loans technically do not pass this test, and that many of them are loans against property that were transferred to LLCs, a very common practice that in theory risks the due on sale clause.
Where I think the risk of the Due on Sale Clause comes into play in particular with Subject To is the nature of the buyer and seller.
In many cases the seller is so desperate that they are willing to risk their credit to a buyer who really has no business buying real estate. This desperate seller is highly likely to be bad with money, and is likely to go on to have a bankruptcy or other financial issue a few years down the line. The lender WILL notice that bankruptcy, and that is the time when the buyer is at risk of having the note called due.
This, before we even get to discussing the risk that the buyer fails to service the debt.
It's an extraordinary extension of trust to get into a due on sale deal with someone, and many don't get it when they enter the deal.

Podcast Guest on Show #223
1 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Scott Trench:
  
  The first paragraph of this is a false premise - "That means it has to be paid off when the property changes hands, unless the lender approves an assumption."
  This is generally not true. A more accurate statement is:
  "The lender has the option to call the note due."
  I would bet that several million loans technically do not pass this test, and that many of them are loans against property that were transferred to LLCs, a very common practice that in theory risks the due on sale clause.
  Where I think the risk of the Due on Sale Clause comes into play in particular with Subject To is the nature of the buyer and seller.
  In many cases the seller is so desperate that they are willing to risk their credit to a buyer who really has no business buying real estate. This desperate seller is highly likely to be bad with money, and is likely to go on to have a bankruptcy or other financial issue a few years down the line. The lender WILL notice that bankruptcy, and that is the time when the buyer is at risk of having the note called due.
  This, before we even get to discussing the risk that the buyer fails to service the debt.
  It's an extraordinary extension of trust to get into a due on sale deal with someone, and many don't get it when they enter the deal.
  
  "...desperate seller is highly likely to be bad with money, and is likely to go on to have a bankruptcy or other financial issue a few years down the line. The lender WILL notice that bankruptcy, and that is the time when the buyer is at risk of having the note called due."
  That's a good point. It's the somewhat quazi-ponzi nature of the economy as a whole, right.
  When things are good, all is pumping and appreciating, things go fine because all is pumping and appreciating.
  But move into recession or recession like economy, layoff's ticking up as are now, stagnation or recession..... Things start blowing apart fast.
  Increase in layoff's will naturally result in increase in BK's, will be curious to see how this flows through to increase in DOS being called. Next 6-12 months will be interesting time as ai and robots disruption process's through.
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Scott Trench:
  
  The first paragraph of this is a false premise - "That means it has to be paid off when the property changes hands, unless the lender approves an assumption."
  This is generally not true. A more accurate statement is:
  "The lender has the option to call the note due."
  I would bet that several million loans technically do not pass this test, and that many of them are loans against property that were transferred to LLCs, a very common practice that in theory risks the due on sale clause.
  Where I think the risk of the Due on Sale Clause comes into play in particular with Subject To is the nature of the buyer and seller.
  In many cases the seller is so desperate that they are willing to risk their credit to a buyer who really has no business buying real estate. This desperate seller is highly likely to be bad with money, and is likely to go on to have a bankruptcy or other financial issue a few years down the line. The lender WILL notice that bankruptcy, and that is the time when the buyer is at risk of having the note called due.
  This, before we even get to discussing the risk that the buyer fails to service the debt.
  It's an extraordinary extension of trust to get into a due on sale deal with someone, and many don't get it when they enter the deal.
  
  "...desperate seller is highly likely to be bad with money, and is likely to go on to have a bankruptcy or other financial issue a few years down the line. The lender WILL notice that bankruptcy, and that is the time when the buyer is at risk of having the note called due."
  That's a good point. It's the somewhat quazi-ponzi nature of the economy as a whole, right.
  When things are good, all is pumping and appreciating, things go fine because all is pumping and appreciating.
  But move into recession or recession like economy, layoff's ticking up as are now, stagnation or recession..... Things start blowing apart fast.
  Increase in layoff's will naturally result in increase in BK's, will be curious to see how this flows through to increase in DOS being called. Next 6-12 months will be interesting time as ai and robots disruption process's through.
  
  .
  Tell me, who appointed you god to control other people's lives?? Just a simple question. Lighten up and smell the hummus.
  If you ran the world, there would be no second chances. Most people benefit from second chances. Plus we keep on them to finish the contract. If there was any deception or wrong doing, the courts would have addressed it at trial.
  
  @James Hamling: For what, the THIRD time :
  
  PLEASE, You have to link to the SPECIFIC statute and case law to support your argument, and I 'm afraid that doesn't exist. Your "feelings" of what should be legal and illegal just aren't supported by facts. Stick to Minnesota. Also, read up on leases and options.
  
  So, we have a mortgage broker in Minnesota who doesn't know the difference between a single document Lease/Option and having Separate Lease and Separate Option agreements, telling a Judge in Arizona who reviewed each document, that he, the judge, is wrong. A judge who adjudicated the case involving those very documents in a specific case in Arizona. (Awarding eviction, loss of Option fee and granting judgment amount, plus court costs, to me) My oh my!
  
  Fascinating. The hubris that takes.
  (Hubris: "extreme or excessive pride or dangerous overconfidence and complacency, arrogance")
  0 Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Well, there’s a lot of concerns with subject to for both buyer and seller. Proper structure, preparation and knowledge will alleviate 75% of the concerns. However, only the ability of the buyer to pay off or refinance the note if it is accelerated will “solve” that particular concern.
Yes, investors had done 2 gazillion sub tos and only 2 were ever “called” due. BUT, we’ve had basically falling interest rates over the last 44 years and until recently, the technology wasn’t in place to easily detect deed transfers.
IMO, IF interest rates eventually rise considerably, like to the 8% + range, we will see a LOT of 3-5% loans that are associated with deed transfers being accelerated. The lenders will probably agree to allow the loan to be assumed at a much higher interest rate with the new owner having to qualify.
To me the seller should only do a sub to sale if either (1) he’s a knowledgeable real estate investor who is doing it for greater profit, and is ready to mitigate or accept any negative consequences, or (2) is a homeowner with no better option.
As an investor, if I’m looking to hold long term, I am able to pay 15 -20% more for a property with built in 3% financing than I can for a property I need to finance with a new loan carrying a 6.5% rate.
Private Mortgage Financing Partners, LLC
Website View Page
2 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Don Konipol:
  
  Well, there’s a lot of concerns with subject to for both buyer and seller. Proper structure, preparation and knowledge will alleviate 75% of the concerns. However, only the ability of the buyer to pay off or refinance the note if it is accelerated will “solve” that particular concern.
  Yes, investors had done 2 gazillion sub tos and only 2 were ever “called” due. BUT, we’ve had basically falling interest rates over the last 44 years and until recently, the technology wasn’t in place to easily detect deed transfers.
  IMO, IF interest rates eventually rise considerably, like to the 8% + range, we will see a LOT of 3-5% loans that are associated with deed transfers being accelerated. The lenders will probably agree to allow the loan to be assumed at a much higher interest rate with the new owner having to qualify.
  To me the seller should only do a sub to sale if either (1) he’s a knowledgeable real estate investor who is doing it for greater profit, and is ready to mitigate or accept any negative consequences, or (2) is a homeowner with no better option.
  As an investor, if I’m looking to hold long term, I am able to pay 15 -20% more for a property with built in 3% financing than I can for a property I need to finance with a new loan carrying a 6.5% rate.
  
  I agree. Only those (typically accredited investors) and those with ability to pay off the loan quickly, should attempt Subject To and I for one have always maintained that sentiment.
  
  I don't think that it is wise or safe, for anyone involved, to join an entire Facebook page (with 168,000 members) dedicated to buying houses using Subject To, with no money in the bank, bad credit and using "gator" lenders (sounds predatory to me Lol) to be able to close, no title insurance needed, they say. (It keeps expenses down, they say) My oh my!
  
  You can usually identify these folks by the "SubTo" term designation, coined by their, so far, "fearless' leader.
  0 Reply
- Shiloh LundahlPro Member
  Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
  1y
  @James Hamling I don't understand why you argue with people about what you think they should or shouldn't be able to do. Especially if they have been doing it for years.
  
  You seem to demonize the lease option strategy while it is a legitimate strategy since probably before you were born. Yet it appears as though you you assert to know all the legalities of it in multiple states.
  
  I have done somewhere between 80 and 100 lease options across 2 states. And I have helped dozens of people become home owners (probably around 30 - 40) that have exercised their options. It looks like @Ken M. has a higher success rate than me. And I think one of the main reasons is because he charges a higher option fee than me. Most of my option fees are between $3000 and $5000 depending on the property. I also usually charge $200 above market rent and then I give the tenant a $100 discount to the tenant buyer to take care of any issues that come up with the property during the 3-year option period. I take care of any serious issues that I think may break within a three year period of time before doing the lease option. if something major does come up, and they're not in a position to take care of it, then I may take care of it and then I just add the cost to the option strike price.
  
  whenever I've had people bring in a larger option fee then I will lower the option price each year. For example, let's say the property values at $300,000 today and let's say that I'm selling it on a lease with the option to buy for $330,000 within a three year period of time. Let's say they bring in $30,000 as an option fee. I would then fix the option price at $300,000 for the next year and then I would lower the strike price to $295,000 during the second year and $290,000 during the third year. Every time except for once when someone has put an option fee over $20,000 they have exercise the option.
  
  The option document and the lease document are separate documents. Everything is explained to them, and they initial next to paragraphs showing that they understand the paragraph.
  
  This has been shown to be a fantastic strategy for many people that are not able to get a loan to purchase a home today. in fact, I purchased my own home using the lease option strategy as the buyer. Most of the time I use the lease option strategy as the seller.
  
  You just need to be an ethical Investor. If you're not an ethical Investor, then you can misuse this strategy just as you can misuse almost any other real estate strategy.
  480-206-1209 Podcast Guest on Show #287
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Shiloh Lundahl:
  
  @James Hamling I don't understand why you argue with people about what you think they should or shouldn't be able to do. Especially if they have been doing it for years.
  
  You seem to demonize the lease option strategy while it is a legitimate strategy since probably before you were born. Yet it appears as though you you assert to know all the legalities of it in multiple states.
  
  I have done somewhere between 80 and 100 lease options across 2 states. And I have helped dozens of people become home owners (probably around 30 - 40) that have exercised their options. It looks like @Ken M. has a higher success rate than me. And I think one of the main reasons is because he charges a higher option fee than me. Most of my option fees are between $3000 and $5000 depending on the property. I also usually charge $200 above market rent and then I give the tenant a $100 discount to the tenant buyer to take care of any issues that come up with the property during the 3-year option period. I take care of any serious issues that I think may break within a three year period of time before doing the lease option. if something major does come up, and they're not in a position to take care of it, then I may take care of it and then I just add the cost to the option strike price.
  
  whenever I've had people bring in a larger option fee then I will lower the option price each year. For example, let's say the property values at $300,000 today and let's say that I'm selling it on a lease with the option to buy for $330,000 within a three year period of time. Let's say they bring in $30,000 as an option fee. I would then fix the option price at $300,000 for the next year and then I would lower the strike price to $295,000 during the second year and $290,000 during the third year. Every time except for once when someone has put an option fee over $20,000 they have exercise the option.
  
  The option document and the lease document are separate documents. Everything is explained to them, and they initial next to paragraphs showing that they understand the paragraph.
  
  This has been shown to be a fantastic strategy for many people that are not able to get a loan to purchase a home today. in fact, I purchased my own home using the lease option strategy as the buyer. Most of the time I use the lease option strategy as the seller.
  
  You just need to be an ethical Investor. If you're not an ethical Investor, then you can misuse this strategy just as you can misuse almost any other real estate strategy.
  
  You need to go back through and read things from the beginning, not just Kens lies and distortion of things.
  It's not opinion, I never threw out opinion, I was speaking from AZ laws and I linked the laws, several times. Ken just kept responding with Gaslighting.
  And here is the rub.
  Ken detailed a scheme where he sells a Lease with Option. 100% legal and legit, right. But Ken said he does this to then REFUSE any and all Landlord responsibilities during the lease. And if/when that tenant/buyer want's him, the Landlord, to do ANY of the Landlord responsibilities DURING THE LEASE, he does it AT THE COST OF tenant/buyer loosing their entire purchase option deposit and the purchase option.
  Ken goes on to infer that this is legit, which it is NOT. You know it's not legit Shiloh.
  To Create a lease with someone, and sell them a purchase option, with the INTENT to NOT adhere to the Landlord/Tenant regulations and responsibilities, AND WITH the intent that if/when tenant requests landlord to perform on Landlord responsibilities, tenant/buyer suffer the loss of their Purchase Option being cancelled AND the total loss of their $40,000.00.
  I made it very simple, and clear. It is a Lease WITH Option, 2 seperate instruments when a person does one of these. Which you get Shiloh, I know you do as you spoke to it here. Ken say's NO, that he shazams it into 1 instrument because he put's it on the same paper, and that he can supersede the laws of AZ and have a tenant sign away their tenants rights and landlord responsibilities.
  There is no opinion needed int his regard, AZ law is very clear on this, tenants can not sign away their tenant rights, that any agreement where they do is not enforceable. It's clear cut, I linked the regulations on this.
  Now keep in mind, Ken all but bragged he does these thing WITH THE INTENT to create this situation, where later when xyz breaks, and tenant puts in a service request, that Ken then tells em sure hell do it, BUT there gonna loose all the $ and the Purchase Option.
  THAT intent right there, that brings the 1 thing I DID say, and clarify, is my OPINION that it looks a whole-lot like Theft by Swindle, AZ and TX have a different name for this but it's the same thing and has similar regulations around it.
  Now you tell me Shiloh, how legit does Kens scheme look?
  Also note I am "the" Contract For Deed guy in MN, I have done more of these than most brokerages, I am very PRO terms transactions, I do tons of them, even complex sandwich ones. My experience is how I can readily identify how NOT legal what Ken is promoting is.
  And no, Ken does NOT have any volume of these. Ken is a Charlatan, definitively, look up the word.
  Ken is pretending at a knowledge and experience he does not possess, promoting a scheme that is not legal, and using gaslighting in a desperate action to obfuscate his scheme being uncovered as such, because Kens focus is getting persons on BP to pay him as a Guru for his "training".
  When presented with the facts, Kens Gaslighted. Ken did not argue on the facts, he just pretended they don't exist unless get's packaged how he wants. Which the moment anyone does, Ken moves the goal post to a next level of his required packaging, and again and again and again. Classical narcissist gaslighting.
  Lease with Option is 100% fine and legal, when a person follows the rules and regulations and does not twist and extort them for other purposes as Kens scheme does.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Shiloh Lundahl:
  
  @James Hamling I don't understand why you argue with people about what you think they should or shouldn't be able to do. Especially if they have been doing it for years.
  
  You seem to demonize the lease option strategy while it is a legitimate strategy since probably before you were born. Yet it appears as though you you assert to know all the legalities of it in multiple states.
  
  I have done somewhere between 80 and 100 lease options across 2 states. And I have helped dozens of people become home owners (probably around 30 - 40) that have exercised their options. It looks like @Ken M. has a higher success rate than me. And I think one of the main reasons is because he charges a higher option fee than me. Most of my option fees are between $3000 and $5000 depending on the property. I also usually charge $200 above market rent and then I give the tenant a $100 discount to the tenant buyer to take care of any issues that come up with the property during the 3-year option period. I take care of any serious issues that I think may break within a three year period of time before doing the lease option. if something major does come up, and they're not in a position to take care of it, then I may take care of it and then I just add the cost to the option strike price.
  
  whenever I've had people bring in a larger option fee then I will lower the option price each year. For example, let's say the property values at $300,000 today and let's say that I'm selling it on a lease with the option to buy for $330,000 within a three year period of time. Let's say they bring in $30,000 as an option fee. I would then fix the option price at $300,000 for the next year and then I would lower the strike price to $295,000 during the second year and $290,000 during the third year. Every time except for once when someone has put an option fee over $20,000 they have exercise the option.
  
  The option document and the lease document are separate documents. Everything is explained to them, and they initial next to paragraphs showing that they understand the paragraph.
  
  This has been shown to be a fantastic strategy for many people that are not able to get a loan to purchase a home today. in fact, I purchased my own home using the lease option strategy as the buyer. Most of the time I use the lease option strategy as the seller.
  
  You just need to be an ethical Investor. If you're not an ethical Investor, then you can misuse this strategy just as you can misuse almost any other real estate strategy.
  
  You need to go back through and read things from the beginning, not just Kens lies and distortion of things.
  It's not opinion, I never threw out opinion, I was speaking from AZ laws and I linked the laws, several times. Ken just kept responding with Gaslighting.
  And here is the rub.
  Ken detailed a scheme where he sells a Lease with Option. 100% legal and legit, right. But Ken said he does this to then REFUSE any and all Landlord responsibilities during the lease. And if/when that tenant/buyer want's him, the Landlord, to do ANY of the Landlord responsibilities DURING THE LEASE, he does it AT THE COST OF tenant/buyer loosing their entire purchase option deposit and the purchase option.
  Ken goes on to infer that this is legit, which it is NOT. You know it's not legit Shiloh.
  To Create a lease with someone, and sell them a purchase option, with the INTENT to NOT adhere to the Landlord/Tenant regulations and responsibilities, AND WITH the intent that if/when tenant requests landlord to perform on Landlord responsibilities, tenant/buyer suffer the loss of their Purchase Option being cancelled AND the total loss of their $40,000.00.
  I made it very simple, and clear. It is a Lease WITH Option, 2 seperate instruments when a person does one of these. Which you get Shiloh, I know you do as you spoke to it here. Ken say's NO, that he shazams it into 1 instrument because he put's it on the same paper, and that he can supersede the laws of AZ and have a tenant sign away their tenants rights and landlord responsibilities.
  There is no opinion needed int his regard, AZ law is very clear on this, tenants can not sign away their tenant rights, that any agreement where they do is not enforceable. It's clear cut, I linked the regulations on this.
  Now keep in mind, Ken all but bragged he does these thing WITH THE INTENT to create this situation, where later when xyz breaks, and tenant puts in a service request, that Ken then tells em sure hell do it, BUT there gonna loose all the $ and the Purchase Option.
  THAT intent right there, that brings the 1 thing I DID say, and clarify, is my OPINION that it looks a whole-lot like Theft by Swindle, AZ and TX have a different name for this but it's the same thing and has similar regulations around it.
  Now you tell me Shiloh, how legit does Kens scheme look?
  Also note I am "the" Contract For Deed guy in MN, I have done more of these than most brokerages, I am very PRO terms transactions, I do tons of them, even complex sandwich ones. My experience is how I can readily identify how NOT legal what Ken is promoting is.
  And no, Ken does NOT have any volume of these. Ken is a Charlatan, definitively, look up the word.
  Ken is pretending at a knowledge and experience he does not possess, promoting a scheme that is not legal, and using gaslighting in a desperate action to obfuscate his scheme being uncovered as such, because Kens focus is getting persons on BP to pay him as a Guru for his "training".
  When presented with the facts, Kens Gaslighted. Ken did not argue on the facts, he just pretended they don't exist unless get's packaged how he wants. Which the moment anyone does, Ken moves the goal post to a next level of his required packaging, and again and again and again. Classical narcissist gaslighting.
  Lease with Option is 100% fine and legal, when a person follows the rules and regulations and does not twist and extort them for other purposes as Kens scheme does.
  
  ...
  
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Shiloh Lundahl:
  
  @James Hamling I don't understand why you argue with people about what you think they should or shouldn't be able to do. Especially if they have been doing it for years.
  
  You seem to demonize the lease option strategy while it is a legitimate strategy since probably before you were born. Yet it appears as though you you assert to know all the legalities of it in multiple states.
  
  I have done somewhere between 80 and 100 lease options across 2 states. And I have helped dozens of people become home owners (probably around 30 - 40) that have exercised their options. It looks like @Ken M. has a higher success rate than me. And I think one of the main reasons is because he charges a higher option fee than me. Most of my option fees are between $3000 and $5000 depending on the property. I also usually charge $200 above market rent and then I give the tenant a $100 discount to the tenant buyer to take care of any issues that come up with the property during the 3-year option period. I take care of any serious issues that I think may break within a three year period of time before doing the lease option. if something major does come up, and they're not in a position to take care of it, then I may take care of it and then I just add the cost to the option strike price.
  
  whenever I've had people bring in a larger option fee then I will lower the option price each year. For example, let's say the property values at $300,000 today and let's say that I'm selling it on a lease with the option to buy for $330,000 within a three year period of time. Let's say they bring in $30,000 as an option fee. I would then fix the option price at $300,000 for the next year and then I would lower the strike price to $295,000 during the second year and $290,000 during the third year. Every time except for once when someone has put an option fee over $20,000 they have exercise the option.
  
  The option document and the lease document are separate documents. Everything is explained to them, and they initial next to paragraphs showing that they understand the paragraph.
  
  This has been shown to be a fantastic strategy for many people that are not able to get a loan to purchase a home today. in fact, I purchased my own home using the lease option strategy as the buyer. Most of the time I use the lease option strategy as the seller.
  
  You just need to be an ethical Investor. If you're not an ethical Investor, then you can misuse this strategy just as you can misuse almost any other real estate strategy.
  
  You need to go back through and read things from the beginning, not just Kens lies and distortion of things.
  It's not opinion, I never threw out opinion, I was speaking from AZ laws and I linked the laws, several times. Ken just kept responding with Gaslighting.
  And here is the rub.
  Ken detailed a scheme where he sells a Lease with Option. 100% legal and legit, right. But Ken said he does this to then REFUSE any and all Landlord responsibilities during the lease. And if/when that tenant/buyer want's him, the Landlord, to do ANY of the Landlord responsibilities DURING THE LEASE, he does it AT THE COST OF tenant/buyer loosing their entire purchase option deposit and the purchase option.
  Ken goes on to infer that this is legit, which it is NOT. You know it's not legit Shiloh.
  To Create a lease with someone, and sell them a purchase option, with the INTENT to NOT adhere to the Landlord/Tenant regulations and responsibilities, AND WITH the intent that if/when tenant requests landlord to perform on Landlord responsibilities, tenant/buyer suffer the loss of their Purchase Option being cancelled AND the total loss of their $40,000.00.
  I made it very simple, and clear. It is a Lease WITH Option, 2 seperate instruments when a person does one of these. Which you get Shiloh, I know you do as you spoke to it here. Ken say's NO, that he shazams it into 1 instrument because he put's it on the same paper, and that he can supersede the laws of AZ and have a tenant sign away their tenants rights and landlord responsibilities.
  There is no opinion needed int his regard, AZ law is very clear on this, tenants can not sign away their tenant rights, that any agreement where they do is not enforceable. It's clear cut, I linked the regulations on this.
  Now keep in mind, Ken all but bragged he does these thing WITH THE INTENT to create this situation, where later when xyz breaks, and tenant puts in a service request, that Ken then tells em sure hell do it, BUT there gonna loose all the $ and the Purchase Option.
  THAT intent right there, that brings the 1 thing I DID say, and clarify, is my OPINION that it looks a whole-lot like Theft by Swindle, AZ and TX have a different name for this but it's the same thing and has similar regulations around it.
  Now you tell me Shiloh, how legit does Kens scheme look?
  Also note I am "the" Contract For Deed guy in MN, I have done more of these than most brokerages, I am very PRO terms transactions, I do tons of them, even complex sandwich ones. My experience is how I can readily identify how NOT legal what Ken is promoting is.
  And no, Ken does NOT have any volume of these. Ken is a Charlatan, definitively, look up the word.
  Ken is pretending at a knowledge and experience he does not possess, promoting a scheme that is not legal, and using gaslighting in a desperate action to obfuscate his scheme being uncovered as such, because Kens focus is getting persons on BP to pay him as a Guru for his "training".
  When presented with the facts, Kens Gaslighted. Ken did not argue on the facts, he just pretended they don't exist unless get's packaged how he wants. Which the moment anyone does, Ken moves the goal post to a next level of his required packaging, and again and again and again. Classical narcissist gaslighting.
  Lease with Option is 100% fine and legal, when a person follows the rules and regulations and does not twist and extort them for other purposes as Kens scheme does.
  ...
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Shiloh Lundahl:
  
  @James Hamling I don't understand why you argue with people about what you think they should or shouldn't be able to do. Especially if they have been doing it for years.
  
  You seem to demonize the lease option strategy while it is a legitimate strategy since probably before you were born. Yet it appears as though you you assert to know all the legalities of it in multiple states.
  
  I have done somewhere between 80 and 100 lease options across 2 states. And I have helped dozens of people become home owners (probably around 30 - 40) that have exercised their options. It looks like @Ken M. has a higher success rate than me. And I think one of the main reasons is because he charges a higher option fee than me. Most of my option fees are between $3000 and $5000 depending on the property. I also usually charge $200 above market rent and then I give the tenant a $100 discount to the tenant buyer to take care of any issues that come up with the property during the 3-year option period. I take care of any serious issues that I think may break within a three year period of time before doing the lease option. if something major does come up, and they're not in a position to take care of it, then I may take care of it and then I just add the cost to the option strike price.
  
  whenever I've had people bring in a larger option fee then I will lower the option price each year. For example, let's say the property values at $300,000 today and let's say that I'm selling it on a lease with the option to buy for $330,000 within a three year period of time. Let's say they bring in $30,000 as an option fee. I would then fix the option price at $300,000 for the next year and then I would lower the strike price to $295,000 during the second year and $290,000 during the third year. Every time except for once when someone has put an option fee over $20,000 they have exercise the option.
  
  The option document and the lease document are separate documents. Everything is explained to them, and they initial next to paragraphs showing that they understand the paragraph.
  
  This has been shown to be a fantastic strategy for many people that are not able to get a loan to purchase a home today. in fact, I purchased my own home using the lease option strategy as the buyer. Most of the time I use the lease option strategy as the seller.
  
  You just need to be an ethical Investor. If you're not an ethical Investor, then you can misuse this strategy just as you can misuse almost any other real estate strategy.
  
  You need to go back through and read things from the beginning, not just Kens lies and distortion of things.
  It's not opinion, I never threw out opinion, I was speaking from AZ laws and I linked the laws, several times. Ken just kept responding with Gaslighting.
  And here is the rub.
  Ken detailed a scheme where he sells a Lease with Option. 100% legal and legit, right. But Ken said he does this to then REFUSE any and all Landlord responsibilities during the lease. And if/when that tenant/buyer want's him, the Landlord, to do ANY of the Landlord responsibilities DURING THE LEASE, he does it AT THE COST OF tenant/buyer loosing their entire purchase option deposit and the purchase option.
  Ken goes on to infer that this is legit, which it is NOT. You know it's not legit Shiloh.
  To Create a lease with someone, and sell them a purchase option, with the INTENT to NOT adhere to the Landlord/Tenant regulations and responsibilities, AND WITH the intent that if/when tenant requests landlord to perform on Landlord responsibilities, tenant/buyer suffer the loss of their Purchase Option being cancelled AND the total loss of their $40,000.00.
  I made it very simple, and clear. It is a Lease WITH Option, 2 seperate instruments when a person does one of these. Which you get Shiloh, I know you do as you spoke to it here. Ken say's NO, that he shazams it into 1 instrument because he put's it on the same paper, and that he can supersede the laws of AZ and have a tenant sign away their tenants rights and landlord responsibilities.
  There is no opinion needed int his regard, AZ law is very clear on this, tenants can not sign away their tenant rights, that any agreement where they do is not enforceable. It's clear cut, I linked the regulations on this.
  Now keep in mind, Ken all but bragged he does these thing WITH THE INTENT to create this situation, where later when xyz breaks, and tenant puts in a service request, that Ken then tells em sure hell do it, BUT there gonna loose all the $ and the Purchase Option.
  THAT intent right there, that brings the 1 thing I DID say, and clarify, is my OPINION that it looks a whole-lot like Theft by Swindle, AZ and TX have a different name for this but it's the same thing and has similar regulations around it.
  Now you tell me Shiloh, how legit does Kens scheme look?
  Also note I am "the" Contract For Deed guy in MN, I have done more of these than most brokerages, I am very PRO terms transactions, I do tons of them, even complex sandwich ones. My experience is how I can readily identify how NOT legal what Ken is promoting is.
  And no, Ken does NOT have any volume of these. Ken is a Charlatan, definitively, look up the word.
  Ken is pretending at a knowledge and experience he does not possess, promoting a scheme that is not legal, and using gaslighting in a desperate action to obfuscate his scheme being uncovered as such, because Kens focus is getting persons on BP to pay him as a Guru for his "training".
  When presented with the facts, Kens Gaslighted. Ken did not argue on the facts, he just pretended they don't exist unless get's packaged how he wants. Which the moment anyone does, Ken moves the goal post to a next level of his required packaging, and again and again and again. Classical narcissist gaslighting.
  Lease with Option is 100% fine and legal, when a person follows the rules and regulations and does not twist and extort them for other purposes as Kens scheme does.
  .
  Well, @James Hamling: when I asked you to provide the statute that was violated, you failed to do so. Then you retorted with calling me a liar
  
  (your comment: "You need to go back through and read things from the beginning, not just Kens lies") and your post goes on and gets worse.
  
  and since I actually took this through the court system and won, it's fully documented, it's best you take a break and get a perspective on things.
  0 Reply
Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
1y
@James Hamling I'll answer your question with the phrase "It depends."
I thought I had read all of the posts connected to this thread, and I saw that you reference the Arizona tenant landlord act, which is 50 pages. I didn't notice that you had reference anything specific.

Here's a scenario and you tell me your thoughts.

let's say somebody is not able to qualify for a mortgage and they are interested in a lease with the option to buy. So they go into contract as a lease with the option to buy. They have three years to buy the subject property, and they've been living in it and enjoying the property during that time. They know that the air conditioner is not brand new and will likely only last a couple more years after they purchased the property and then it will need to be replaced. Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option.

How do you think this situation should be handled?
480-206-1209 Podcast Guest on Show #287
0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Shiloh Lundahl:
  
  @James Hamling I'll answer your question with the phrase "It depends."
  I thought I had read all of the posts connected to this thread, and I saw that you reference the Arizona tenant landlord act, which is 50 pages. I didn't notice that you had reference anything specific.
  
  Here's a scenario and you tell me your thoughts.
  
  let's say somebody is not able to qualify for a mortgage and they are interested in a lease with the option to buy. So they go into contract as a lease with the option to buy. They have three years to buy the subject property, and they've been living in it and enjoying the property during that time. They know that the air conditioner is not brand new and will likely only last a couple more years after they purchased the property and then it will need to be replaced. Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option.
  
  How do you think this situation should be handled?
  
  Notice the actions and intentions in your example Shiloh. A tenant with option to buy, intentionally sabotaging the a/c, to scam the situation to get a new a/c free of charge immediately before executing on the purchase option.
  Given that at that time they are a tenant, under a lease, I'd say follow the laws and regulations surrounding leases and tenants. If it were me, yup, I'd assess the cost to them as they intentionally damaged it. This is all standard landlord stuff, right.
  Now it could work out that the tenants fight it, and as landlord your unable to prove it all, and would loose in court so as landlord get stiffed for that bill. It sucks, I dislike it, but it is the reality of this industry and stuff like that happens sometimes.
  You really jumped down my throat previously, and it wasn't warranted in my opinion. Your side stepping the central fact that Kens scheme is a blatant violation of the laws and regulations. It's not opinion, it's legal fact, a tenant can not sign away their tenants rights. And to concoct a scheme, with the intent to do the actions Ken detailed, is not legal.
  There is no "it depends", tenants can not sign away tenants rights. To formulate a transaction with the intent to do the things Ken says he makes them with intention for, again, not legal.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Shiloh Lundahl:
  
  @James Hamling I'll answer your question with the phrase "It depends."
  I thought I had read all of the posts connected to this thread, and I saw that you reference the Arizona tenant landlord act, which is 50 pages. I didn't notice that you had reference anything specific.
  
  Here's a scenario and you tell me your thoughts.
  
  let's say somebody is not able to qualify for a mortgage and they are interested in a lease with the option to buy. So they go into contract as a lease with the option to buy. They have three years to buy the subject property, and they've been living in it and enjoying the property during that time. They know that the air conditioner is not brand new and will likely only last a couple more years after they purchased the property and then it will need to be replaced. Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option.
  
  How do you think this situation should be handled?
  
  Notice the actions and intentions in your example Shiloh. A tenant with option to buy, intentionally sabotaging the a/c, to scam the situation to get a new a/c free of charge immediately before executing on the purchase option.
  Given that at that time they are a tenant, under a lease, I'd say follow the laws and regulations surrounding leases and tenants. If it were me, yup, I'd assess the cost to them as they intentionally damaged it. This is all standard landlord stuff, right.
  Now it could work out that the tenants fight it, and as landlord your unable to prove it all, and would loose in court so as landlord get stiffed for that bill. It sucks, I dislike it, but it is the reality of this industry and stuff like that happens sometimes.
  You really jumped down my throat previously, and it wasn't warranted in my opinion. Your side stepping the central fact that Kens scheme is a blatant violation of the laws and regulations. It's not opinion, it's legal fact, a tenant can not sign away their tenants rights. And to concoct a scheme, with the intent to do the actions Ken detailed, is not legal.
  There is no "it depends", tenants can not sign away tenants rights. To formulate a transaction with the intent to do the things Ken says he makes them with intention for, again, not legal.
  .
  Your comment "A tenant with option to buy, intentionally sabotaging the a/c, to scam the situation to get a new a/c free of charge immediately before executing on the purchase option."
  
  No one said that.
  
  Now, you're making things up "from whole cloth", out of thin air, (meaning: something that is completely fictitious, fabricated, or not based on reality)
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Shiloh Lundahl:
  
  @James Hamling I'll answer your question with the phrase "It depends."
  I thought I had read all of the posts connected to this thread, and I saw that you reference the Arizona tenant landlord act, which is 50 pages. I didn't notice that you had reference anything specific.
  
  Here's a scenario and you tell me your thoughts.
  
  let's say somebody is not able to qualify for a mortgage and they are interested in a lease with the option to buy. So they go into contract as a lease with the option to buy. They have three years to buy the subject property, and they've been living in it and enjoying the property during that time. They know that the air conditioner is not brand new and will likely only last a couple more years after they purchased the property and then it will need to be replaced. Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option.
  
  How do you think this situation should be handled?
  
  As an additional note to my reply on this, it's situations just like this why I prefer Contract For Deed over Lease With Option.
  C4D that situation wouldn't happen as it's set who covers what from start, and without a lease all the tenant stuff doesn't come into play for such a possible scam by tenant/buyers.
  I know C4D regulations vary a fair bit state to state, heck MN just did some huge changes, but in general when selling I much prefer that transaction method or something most like it for those simplicity reasons.
  When on buy side, I would rather have purchase option or LWO.
  Because I want all the upside potentials and the least downside potentials. I'd happily buy all the properties I can get my hand's on under LWO and sublet rights that have a spread vs any other purchase method, heck yeah.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  Quote from @Shiloh Lundahl:
  
  @James Hamling I'll answer your question with the phrase "It depends."
  I thought I had read all of the posts connected to this thread, and I saw that you reference the Arizona tenant landlord act, which is 50 pages. I didn't notice that you had reference anything specific.
  
  Here's a scenario and you tell me your thoughts.
  
  let's say somebody is not able to qualify for a mortgage and they are interested in a lease with the option to buy. So they go into contract as a lease with the option to buy. They have three years to buy the subject property, and they've been living in it and enjoying the property during that time. They know that the air conditioner is not brand new and will likely only last a couple more years after they purchased the property and then it will need to be replaced. Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option.
  
  How do you think this situation should be handled?
  
  Notice the actions and intentions in your example Shiloh. A tenant with option to buy, intentionally sabotaging the a/c, to scam the situation to get a new a/c free of charge immediately before executing on the purchase option.
  Given that at that time they are a tenant, under a lease, I'd say follow the laws and regulations surrounding leases and tenants. If it were me, yup, I'd assess the cost to them as they intentionally damaged it. This is all standard landlord stuff, right.
  Now it could work out that the tenants fight it, and as landlord your unable to prove it all, and would loose in court so as landlord get stiffed for that bill. It sucks, I dislike it, but it is the reality of this industry and stuff like that happens sometimes.
  You really jumped down my throat previously, and it wasn't warranted in my opinion. Your side stepping the central fact that Kens scheme is a blatant violation of the laws and regulations. It's not opinion, it's legal fact, a tenant can not sign away their tenants rights. And to concoct a scheme, with the intent to do the actions Ken detailed, is not legal.
  There is no "it depends", tenants can not sign away tenants rights. To formulate a transaction with the intent to do the things Ken says he makes them with intention for, again, not legal.
  .
  Your comment "A tenant with option to buy, intentionally sabotaging the a/c, to scam the situation to get a new a/c free of charge immediately before executing on the purchase option."
  
  No one said that.
  
  Now, you're making things up "from whole cloth", out of thin air, (meaning: something that is completely fictitious, fabricated, or not based on reality)
  
  Yet AGAIN, MORE LIES FROM KEN!
  Shiloh asked me, on a scenario, and I quote: "....Because they would like to buy the house and they would like to have a brand new air conditioner, they would like to have the owner spend $8000 to put in a brand new air conditioner before they exercise the option. so they do a little sabotage secretly to make it so the air conditioner stops working in order for the owner to replace the air conditioner before they exercise the option."
  0 Reply
Jerry W.Pro Member
Moderator
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
1y
@James Hamling, and @Ken M., I actually read the statutes linked, Statute section 33-1324 (6) C, and D seem to control.

33-1324. Landlord to maintain fit premises

A. The landlord shall:

1. Comply with the requirements of applicable building codes materially affecting health and safety as prescribed in section 9-1303.

2. Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition.

3. Keep all common areas of the premises in a clean and safe condition.

4. Maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances, including elevators, supplied or required to be supplied by him.

5. Provide and maintain appropriate receptacles and conveniences for the removal of ashes, garbage, rubbish and other waste incidental to the occupancy of the dwelling unit and arrange for their removal.

6. Supply running water and reasonable amounts of hot water at all times, reasonable heat and reasonable air-conditioning or cooling where such units are installed and offered, when required by seasonal weather conditions, except where the building that includes the dwelling unit is not required by law to be equipped for that purpose or the dwelling unit is so constructed that heat, air-conditioning, cooling or hot water is generated by an installation within the exclusive control of the tenant and supplied by a direct public utility connection.

B. If the duty imposed by subsection A, paragraph 1 of this section is greater than any duty imposed by any other paragraph of this section, the landlord's duty shall be determined by reference to that paragraph.

C. The landlord and tenant of a single family residence may agree in writing, supported by adequate consideration, that the tenant perform the landlord's duties specified in subsection A, paragraphs 5 and 6 of this section, and also specified repairs, maintenance tasks, alterations and remodeling, but only if the transaction is entered into in good faith, not for the purpose of evading the obligations of the landlord and the work is not necessary to cure noncompliance with subsection A, paragraphs 1 and 2 of this section.

D. The landlord and tenant of any dwelling unit other than a single family residence may agree that the tenant is to perform specified repairs, maintenance tasks, alterations or remodeling only if:

1. The agreement of the parties is entered into in good faith and not for the purpose of evading the obligations of the landlord and is set forth in a separate writing signed by the parties and supported by adequate consideration.

2. The work is not necessary to cure noncompliance with subsection A, paragraphs 1 and 2 of this section.

3. The agreement does not diminish or affect the obligation of the landlord to other tenants in the premises.

So the answer to the question can you assign the obligation to maintain the property depends on factors of whether there is a legitimate reason to and consideration for giving that obligation to the tenant. So is the reason adequate? Would likely be determined by a jury if it went to court, since it is a factual issue.

For the record I have only done one lease with option, it was 2 separate documents, and the parties divorced the second year of the 3 year option, and both moved out. The option fee was $3,000. I doubt that this will settle the argument, but I felt it might make things slightly more factual and less personal.

As an aside, if you want to be taken seriously, please stick to factual arguments and not name calling. Personal insults will not convince anyone. Facts convince people. Finally my father once told me never argue with a fool. There is a second half of that saying, if you figure it out that might help resolve the argument because it seems to apply here.

Thank you guys for the factual parts of your argments, many were enlightening. I learned a lot.

@Shiloh Lundahl, nice to see you posting again. Best wishes bud.
1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Jerry W.:
  
  and @Ken M., I actually read the statutes linked, Statute section 33-1324 (6) C, and D seem to control.
  
  33-1324. Landlord to maintain fit premises
  
  A. The landlord shall:
  
  1. Comply with the requirements of applicable building codes materially affecting health and safety as prescribed in section 9-1303.
  
  2. Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition.
  
  3. Keep all common areas of the premises in a clean and safe condition.
  
  4. Maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appliances, including elevators, supplied or required to be supplied by him.
  
  5. Provide and maintain appropriate receptacles and conveniences for the removal of ashes, garbage, rubbish and other waste incidental to the occupancy of the dwelling unit and arrange for their removal.
  
  6. Supply running water and reasonable amounts of hot water at all times, reasonable heat and reasonable air-conditioning or cooling where such units are installed and offered, when required by seasonal weather conditions, except where the building that includes the dwelling unit is not required by law to be equipped for that purpose or the dwelling unit is so constructed that heat, air-conditioning, cooling or hot water is generated by an installation within the exclusive control of the tenant and supplied by a direct public utility connection.
  
  B. If the duty imposed by subsection A, paragraph 1 of this section is greater than any duty imposed by any other paragraph of this section, the landlord's duty shall be determined by reference to that paragraph.
  
  C. The landlord and tenant of a single family residence may agree in writing, supported by adequate consideration, that the tenant perform the landlord's duties specified in subsection A, paragraphs 5 and 6 of this section, and also specified repairs, maintenance tasks, alterations and remodeling, but only if the transaction is entered into in good faith, not for the purpose of evading the obligations of the landlord and the work is not necessary to cure noncompliance with subsection A, paragraphs 1 and 2 of this section.
  
  D. The landlord and tenant of any dwelling unit other than a single family residence may agree that the tenant is to perform specified repairs, maintenance tasks, alterations or remodeling only if:
  
  1. The agreement of the parties is entered into in good faith and not for the purpose of evading the obligations of the landlord and is set forth in a separate writing signed by the parties and supported by adequate consideration.
  
  2. The work is not necessary to cure noncompliance with subsection A, paragraphs 1 and 2 of this section.
  
  3. The agreement does not diminish or affect the obligation of the landlord to other tenants in the premises.
  
  So the answer to the question can you assign the obligation to maintain the property depends on factors of whether there is a legitimate reason to and consideration for giving that obligation to the tenant. So is the reason adequate? Would likely be determined by a jury if it went to court, since it is a factual issue.
  
  For the record I have only done one lease with option, it was 2 separate documents, and the parties divorced the second year of the 3 year option, and both moved out. The option fee was $3,000. I doubt that this will settle the argument, but I felt it might make things slightly more factual and less personal.
  
  As an aside, if you want to be taken seriously, please stick to factual arguments and not name calling. Personal insults will not convince anyone. Facts convince people. Finally my father once told me never argue with a fool. There is a second half of that saying, if you figure it out that might help resolve the argument because it seems to apply here.
  
  Thank you guys for the factual parts of your argments, many were enlightening. I learned a lot.
  
  @Shiloh Lundahl, nice to see you posting again. Best wishes bud.
  
  @Jerry W.: Good points. However that wasn't exactly what the "discussion" was about. It was much more nuanced.
  
  The question at hand is "can an investor with an Option on a property, who is also leasing the property, (utilizing a separate lease and a separate Option) choose/be forced to take over maintenance of the property under the terms of the Option. Thus foregoing having the landlord maintain the property?" It is an investment property.
  
  The Seller/landlord is willing to fulfill either contract, but the Optionee gets to decide which contract prevails when a major capital expenditure arises. Since it is an Option, the Optionor has no responsibility to repair under the signed Option. The buyer/Optionee is given full control on making the choice. If the Buyer/Optionee decides to pass the major capital expenditure on to the Seller/Optionor, the Seller will fix/replace whatever is at issue. The buyer loses his Option though, because the agreement going in is that part of the Option is take the "risk on the property". The Optionee must select which contract prevails regarding property maintenance only. This is discussed before the agreements are signed.
  
  In this scenario, the court reviewed all documents and all parties were present and represented by counsel. After testimony, the court awarded to the Optionor (seller) damages and court costs.
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