Originally posted by @Marc Whiting :
Are sandwich lease options legal in Virginia?
Probably. Call a real estate attorney to put together the proper paperwork.
I agree with Mike. Your best source for the legality is always a real estate attorney. I recommend calling a local title company and asking first, "Do you have experience with lease options"? If they don't have experience they are unlikely to be in a position to advise.
A good conversation might look something like, "Hey (title company), I am a local real estate investor, and I have a property that I might be able to do a sandwich lease option on and I'm looking for a good title company to execute the agreement. Of course, I would want a title search on the property to make sure their are no other liens that could affect the sale, but can you tell me if you have any experience executing this kind of sale?"
By stating it that way, you may be able to get "free" legal advice because the title company would understand that they get paid to facilitate the closing or to run a title search.
Sandwich leases are legal in VA.
@Ryan Enk - There is no sale in a sandwich lease. In this transaction @Marc Whiting would lease a property from the owner and price $X. His lease would have to allow him to be a master lease holder or sublet the property. Marc would then secure a tenant at a rent price of $X+Y. In months Marc’s tenant did not pay, Marc would still have to pay his rent to the homeowner. I took over property managing a unit one time for an owner who allowed an investor to do a sandwich lease on his property. According to the owner, the investor he leased to was not paying him rent. According to the tenant living in the home, she was paying rent to the investor. I had to first evict the investor to gain possession from him, and then evict the tenant who was living in the property. It was a domino effect - slow an painful for the property owner when the deal goes south.
When I do my sandwich lease options, I always get a title search on the property I have an option to buy. Motivated sellers sometimes tend to “forget” about a lien or a judgement or two, so it’s always wise to do both a tital search and setup an escrow company to facilitate the payments directly to the mortgage company if there is one.