Novation Agreements risks and liability

[Roberto Moita]

Anyone using Novation agreements to secure deals? If so, what are the positive and negative side of using a Novation agreement. I’ve heard of investors doing major renovations under a Novation agreement.

I think that’s a risky business. Doing major renovations to a property that I don’t hold title to it. What if the seller changes his mind… The money invested will be tied up until the courts decide and that could take months.

Thanks in advance for your response and happy holidays!!

[Account Closed]

Quote from @Roberto Moita:

Anyone using Novation agreements to secure deals? If so, what are the positive and negative side of using a Novation agreement. I’ve heard of investors doing major renovations under a Novation agreement.

I think that’s a risky business. Doing major renovations to a property that I don’t hold title to it. What if the seller changes his mind… The money invested will be tied up until the courts decide and that could take months.

Thanks in advance for your response and happy holidays!!

Yes, it is highly risky. You have to be prepared for things to go south and not be able to complete the deal. And a lawsuit can follow that. I'm not saing to not do them, but your question deserves an honest answer.