Cooperative Lease Options

[Sean Integlia]

Hello All,

Was looking at these after purchasing the King Cooperative Purchase System. He includes the contracts, but only shows how to fill out the main one. Process is,
1. Locate seller with little or no equity.
2. Full disclosure Coop Lease Option, where you get 90 days to try to get a tenant buyer to pay 3% to you a assignment fee to assign your lease option. This gets credited to the selling price, but your only paying 1-10 bucks for the option from seller. Option is non exclusive.

Ex. Seller wants 100k, you make the sale price 103k and take the 3 k.
3. Once tenant buyer is qualified, execut a lease and option to purchase between seller and yourself to have something to assign, then assign away. The question, which the owner of the course has not answered is do I put the $10 that I got the option for in the coop agreement, or the 3k that I will be collecting in the option price section of the option to purchase contract ?

Thanks,

Sean Integlia

[Adam King]

Sean
The scenario is to tie the property up with an option, (making you a principal but in some states that's not enough, please keep reading) hire an agent/broker so you pass the "brokering without a license" issue. (not mandatory in most states, but great practice if you want to make sure you're covered as well as doing the deals hands-off)
Then, have THE AGENT locate a tenant/buyer (or you can on your own if you wish) and go into contract with the tenant/buyer as the landlord and THEN assign your interest to whomever you wish.

Or, simply go into contract "as" the tenant/buyer an assign everything to a new tenant/buyer. aka a cooperative assignment.

I've hired the best attorneys in the state of MI (which is a high compliancy state on real estate brokering just ask Bill B, he knows) including the Board of Realtors attorney who once represented us in court and helped put the Cooperative Purchase paperwork together. (So that's where it came from) And finally, all of my attorneys that helped put the program together were all also real estate attorneys as well as brokers.

There's a lot of other issues to discuss also, instead of just brokering without a license. Such as, do some mortgages have clauses that claim an option "is" construed as equitable interest and violates their due on sale clause? As a private lender I have personally put clauses like that in my mortgages so that's another question to ask a seller when tying up the property, i.e. can I see your mortgage to make sure we can even do an option lease/option?
Would this protect you in any way? Not if you're doing an assignment, but it's good practice in order to look out for your seller and tenant/buyer.

So, that's my two cents. But again, these guys are right because in a state like MI the typical law is that if you "sell" (grey area since you're never taking ownership) more than 5 houses in a year you need to have a broker's license or be REPRESENTED by a broker. I chose the latter because it's easier and you're doing what the state is asking you to do whether you need to or not. Better safe than sorry in my opinion.

Although Financexaminer has pinned me as a guru possibly selling a sham course, (which I'm not offended at all because I wholeheartedly agree. Most gurus out there have never even done a deal!) he/she's correct in the sense that you should contact an attorney about these issues so you can at least move to the next phase and do some deals!
Hope that helps,
Adam
PS I'm always here to help you so don't be afraid to ask!
PPS I've done deals in at least 20 other states with students for about a decade now so I can assure you we've exhausted this issue. I hope that helps.