Copyright © 2008 Ralph Marcus (Mark) Maupin
Understanding real estate agreements requires a basic knowledge of what rights or interest to property that are affected by a specific agreement or contract. The following is a basic listing of rights that are commonly dealt with and general descriptions. The following listing does not represent a complete list of the various rights that can be held in and to real estate, nor does it give a thorough and full description of the rights covered, but it is sufficient for practical purposes. A bundle of rights to real estate could include: a. All the rights, fee simple b. Mineral rights c. Air rights d. Water rights e. Life estate f. Remainder interest g. Equitable rights 1. Land contract 2. Leasehold 3. Option 4. Pending purchase contract OWNERSHIP- Fee Simple Ownership. This is the highest form of ownership to property. Generally if you have real estate that you have received a warranty deed for, this is what you have. EQUITABLE INTERESTS- These is rights that are acquired by agreement of the owner, without transferring ownership. In other words, if you have an equitable interest in real estate, you may have the right to acquire title and ownership, but you don't have it yet. Typical examples of equitable interests are the rights of the purchaser under a full accepted purchase agreement, the rights of an optionee under an option agreement and the rights of the purchaser (vendee) under a land contract. LEASEHOLD INTEREST- These is the rights to property for duration of time with no promise to transfer ownership. Rental/leasing applies here as well as use licensing. OWNERSHIP INTERESTS- Ownership to property is a combination of things and rights, and you can own property and not have all parts of ownership and vice versa. These are the basic parts or types of the ownership of real estate: Legal, Equitable, Possession and Use. Legal interest is normally evidenced by having title to the property. Equitable interest is described above. Possession is simply having possession or control of the property. For example, a "squatter" is a person who has possession, but no other rights to the property. "Squatters," simply by virtue of being in possession of the property have certain rights. Use, is simply the right to use the property. A typical example of this is a letter of permission to hunt on land. Places you can go to better find out how you can use these buddle of interest and learn more at a very low cost are as follows: Local real estate licensing schools in your area, entrepreneurial resource centers at local colleges, Real Estate Investing Clubs, Real Estate Investment Association, REIAs, Real Estate Investing Classes at high school, Real Estate Investing Groups, Landlord Club, Real Estate Training Classes, Real Estate Seminars, Real Estate Courses, Real Estate Investing Network, and Real Estate Forums. Use Google.com to find locations in your area. A Real Estate Investing Club's mission is to provide an entrepreneurial atmosphere for real estate investors to learn, and network with new and experienced investors. Real Estate Investors Clubs have been formed for real estate entrepreneurs and professionals with one of their goals to bring like minded individuals together, to achieve greater real estate goals. REIA members come from many walks of life: first time buyers, new investors, licensed agents and mortgage brokers, commercial investors, attorneys, CPAs, and first time landlords.
Ralph Marcus Maupin, Jr. (Mark Maupin), Speaker, Professor, Co-founder National Real Estate Network LLC (REIA), Get Free Real Estate Forms, Terms, Articles and Real Estate Club Locations at: http://MegaEveningEvent.com
Showing posts with label land contract. Show all posts
Showing posts with label land contract. Show all posts
Tuesday, January 8, 2008
Lessons Learned about Buying Foreclosures and Selling on Land Contract
By: Ralph Marcus (Mark) Maupin
Today’s questions are several. Can you buy a house in foreclosure and resell it on a land contract (Contract for Deed) or lease option to the person losing it? Can you buy a home on a new mortgage and resell it on a land contract?
It is very common for someone in foreclosure to ask someone to buy their home out of foreclosure and resell it to them on a land contract or lease option. Does it seem ok to buy a house out of foreclosure for $100,000 and then give the person who was foreclosed on a one year lease option for $130,000?? In my world, the answer is no! If you are in front of a judge, if it looks like a duck, walks like a duck, and acts like a duck, it is a duck. The interest earned on this transaction is 30%. If this is declared an equity loan, the optionee can use usury as a defense against you. The result could be high legal fees, and a loan re-computed to zero interest. You are also subject to penalties by law. A better solution to the above situation would be to do a lease option for this person on a different property if you feel that he is credit worthy.
What is the proper way to resell a house in which you have purchased on a new mortgage? It has been a very common practice to sell the house on a land contract. The new owner then continues to make payments on the mortgage without the mortgage company knowing that there as been a land contract sale. I recently attended a Continuing Education class for realtors and learned that this is in violation of Federal law. Rather then sell the property on a land contract you might consider doing a lease option on the home thus not being in violation of any law. You should be aware that mortgages generally have acceleration clauses that allow them the discretion to declare the mortgage balance due if you violate their prohibitions against re-selling or doing conveyances that look like a sale.
Disclaimer: Real estate investing by nature is risky. You can win, lose or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting or contracting advice.
Please visit my websites (free forms) at http://www.detroitinvestmenthomes.com , http://www.MegaEveningEvent.com and http://www.MrLeaseOption.com
Today’s questions are several. Can you buy a house in foreclosure and resell it on a land contract (Contract for Deed) or lease option to the person losing it? Can you buy a home on a new mortgage and resell it on a land contract?
It is very common for someone in foreclosure to ask someone to buy their home out of foreclosure and resell it to them on a land contract or lease option. Does it seem ok to buy a house out of foreclosure for $100,000 and then give the person who was foreclosed on a one year lease option for $130,000?? In my world, the answer is no! If you are in front of a judge, if it looks like a duck, walks like a duck, and acts like a duck, it is a duck. The interest earned on this transaction is 30%. If this is declared an equity loan, the optionee can use usury as a defense against you. The result could be high legal fees, and a loan re-computed to zero interest. You are also subject to penalties by law. A better solution to the above situation would be to do a lease option for this person on a different property if you feel that he is credit worthy.
What is the proper way to resell a house in which you have purchased on a new mortgage? It has been a very common practice to sell the house on a land contract. The new owner then continues to make payments on the mortgage without the mortgage company knowing that there as been a land contract sale. I recently attended a Continuing Education class for realtors and learned that this is in violation of Federal law. Rather then sell the property on a land contract you might consider doing a lease option on the home thus not being in violation of any law. You should be aware that mortgages generally have acceleration clauses that allow them the discretion to declare the mortgage balance due if you violate their prohibitions against re-selling or doing conveyances that look like a sale.
Disclaimer: Real estate investing by nature is risky. You can win, lose or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting or contracting advice.
Please visit my websites (free forms) at http://www.detroitinvestmenthomes.com , http://www.MegaEveningEvent.com and http://www.MrLeaseOption.com
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