Recently, here in Oregon, we had a lady that was finding vacant homes that were for sale and posing as the owner. She was advertising that she was doing lease options and meeting potential buyers at the home. She would collect a large upfront option fee and first months rent and let them move in. The problem is, she wasn't the owner, and at the next showing it was found out that she wasn't the owner and the dream of home ownership was gone along with their money.

How could this be avoided? First, if the buyers had been working with an agent, that agent would have done a little work, like doing title searches, and gotten a disclosure form from the so called owner. That in itself wouldn't have been complete protection, but since these homes were being represented by an another agent, we would have found out by talking to the other agent, that this person claiming to be the owner was, in fact, not the owner.


Now had this been a "For Sale by Owner", the buyer, being represented by an agent, would have had the protection in that the buyer would not have written a check to the seller directly, and the money would have gone through a title company that would have required proper identification to close. During that time, in most cases, the truth would have come out. If they had an agent that set this up properly, they agent would have required the option money to be paid in to an escrow fund that would only be allowed to be dispersed at the end of the option, so the con-artist wouldn't have gotten that money. Then the escrow service would be paying the mortgage, taxes and insurance for the owner and after that had all been paid, only the remaining amount would have been given to the seller. So the most the con-artist would have gotten of the money would be a couple hundred dollars instead of $5000-$6,000 from the buyer.

As you can see, if any of these buyers would have used the representation of a qualified real estate professional, who understands lease options, they would have been protected all the way down the line, making sure that even it had been the real owner, it would have been set up to so that the first thing that is paid is the mortgage and taxes before the seller!

So protect yourself and use a qualified real estate professional and you won't lose your money and your dream of home ownership. Lease options are a great way to build equity and credit while realizing your dream of home ownership.

                                                                 

For more information on lease options or owner financing, please feel free to contact me anytime via e-mail or by phone.

Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739
Todd@IFoundYourNewHome.com
http://www.ifoundyournewhome.com/

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This post has been included in Oregon Information Washington County, OR Information

14 Comments on Don’t do a lease option without representation

Another thing that has been happening with Lease Options in my neck of the woods is that the funds aren't being escrowed and foreclosures are happening.  Just another reason to work with an agent who knows the market :)

11/25/2007 11:35 AM by Renee Burrows - Las Vegas NV Real Estate (Nevada Realty Solutions)

Great point Todd ... in the current California market you are seeing a lot of OPTIONS and people should know what to look for before signing any paper work.

11/25/2007 11:35 AM by Allen Wright CNS, AHS, REPS (RealtyU)

Todd,

Excellent advice especially in this age of 'stolen identity' and 'privacy violations'...Thanks,   Fran

11/25/2007 11:36 AM by Fran 'The Title Man' Gaspari Title Insurance-PA & NJ (Patriot Land Transfer, Inc.)

Todd,

Three years ago we had a lady who was doing the same exact thing in Florida. One of our clients called me to tell me about this women.I checked her out and promptly notified the police.

She was arrested for fraud.

11/25/2007 11:51 AM by Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission. (Florida List For Less Realty, Inc. Broker/Owner. )

Todd... is that really your card? If I give you mine, will that hand hold it up there too?

11/25/2007 01:02 PM by Portland Oregon Real Estate Broker * Jennifer Bukaty * (RE/MAX equity group, inc.)

Hi Todd,

What a wild lady she must have been. Isn't it amazing the level someone will go to, and where do these people get their morals and standards from? Hope you had a great Thanksgiving.

Sincerely,

Tom Braatz

11/25/2007 01:23 PM by Tom Braatz, South Eastern Wisconsin (Tom Braatz)

Wow!  Sneaky sneaky... There are some crazy scams out there!  This is the first I have heard of this one though.  You are right.  It definitely pays to have a professional in your corner.

11/25/2007 02:12 PM by Classic Property Management of the Antelope Valley - Jonathan Mitchell (Classic Property Management)

Renee - This is one of the first things I do is make sure an escrow fund is set up that pays PITI first, then the seller from what is left over.

Allen - It is dangerous if you don't know what you are doing. It isn't like a normal transaction. If the paperwork is done wrong you could lose a lot of money and your dream home.

Fran - I love to hear this from the escrow side! Most don't realize how important it is to use an escrow company in this kind of transaction.

Scott - Your client did the right thing taking that extra step, most don't though.

Tom - They don't have any, that is the problem.

Jonathan - With you in the rental market I'm surprised you haven't! With a for rent sign out front, I think this would almost be easier.

11/26/2007 12:10 AM by Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon) (Kastings & Associates, Beaverton Oregon Real Estate)

Todd- Yes, you sure do need representation by a licensed real estate agent, and IMO it should be a full service agent. My brother and his family live in Beaverton. My brother is an attorney. Katerina

11/26/2007 12:24 AM by Nestor & Katerina Gasset, Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.)

If I am not mistaken, in Florida we are not allowed to right option contracts, though I would not bet on it. I think, in this case we have to use the attorney.

But it is fascinating that people would find every opportunity to screw others. Unbelievable!

11/26/2007 12:58 AM by Jon Zolsky (FunCoast Realty LLC)

Todd....the very same thing happened here in Cowlitz County, WA about 6 months ago. Being this close to your area, I have to wonder if it was the same person because it was a female and it was exactly as you had described.  To my knowledge, she is still "at large".  Do you know if she is in custody in Oregon? 

11/26/2007 01:07 AM by Christopher Fritts, GRI, CBR, REI, PME, RECS (Realty World Pacific Northwest)

Todd Clark (Realtor), GRI (Washington Co, Beaverton, Oregon) - Great advise.  What this makes me think of is identity theft, in this case the criminal is assuming the identity of the owner of the property - can you imagine if they brought in a contractor.

In my area, people are coming to abandoned homes as if they are job sites and stripping the houses in broad daylight - taking out cabinets, plumbing fixtures and even carpet.  Go figure.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR®
Mission Grove Realty

11/26/2007 09:49 AM by John Occhi Hemet CA Real Estate (Century 21 Crest - Crest REO)

Hi Todd,

It amazes me that there is always a new scam to watch out for, good advice for consumers. Btw, I love your graphic! :)

11/26/2007 10:02 AM by Suzanne Sands-Somerset, MA Real Estate (Century 21 Associates Realty)

Katerina - Is he a real estate attorney?

Jon - I would be surprised if you can't. Because I know you can do owner financing and you can rent properties. Combine the two and you get Lease Options. (I can put you in contact with my mentor, who lives in Florida, I know he would know!)

Christopher - She has been arrested!

John - OK, that is even scarier! Almost no way of getting caught.

Suzanne - Thanks and as soon as one scam is discovered, someone else seems to find a new twist.

11/26/2007 12:51 PM by Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon) (Kastings & Associates, Beaverton Oregon Real Estate)

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Real Estate Agent: Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon) (Kastings & Associates, Beaverton Oregon Real Estate)
Todd Clark (Realtor), GRI (Washington Co, Beaverton Oregon)
Beaverton, OR
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Kastings & Associates, Beaverton Oregon Real Estate

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