I have met a number of buyers that have a contract to purchase a property and then find out the seller has not been making payments to the mortgage company. The buyers are under the impression that the home is theirs, just like a regular mortgage. One buyer purchased a house from his friend. This buyer loved the house and promptly started to remodel the property spending over $40,000 ti make improvements, including putting in a swimming pool.
What a surprise when he went home one day and found the public notice on his front door. What can you do if this happens? Not much. The seller didn't make the mortgage payments.
How to get around purchasing a property from someone that wants to sell on contract? Contact a realtor that has completed this kind of transaction in the past. The kind of house to purchase is a property that does not have a mortgage, and is free and clear.
Why is this? Most mortgages have a "due on sale" clause, so even if the mortgage payments are made on a timely basis, the seller is outside the paperwork that they signed onto the mortgage. While the chance is slim that a servicer may come after the seller in this market, as long as they are making the payments, THEY COULD.
Don't take chances, make sure you deal with an honest seller with honest intentions and engage a professional to help work up the paper work.
So you want to 'lease to purchase' or 'rent to own' a home in Wellington or Palm Beach County Florida?
Some of our buyer agents are getting a lot of inquiries and questions about leasing to own and rent to own properties in Wellington and the rest of Palm Beach County Florida.
Ordinarily from a tenant and future buyer perspective leasing to own or renting to own is a great idea. From the landlord or homeowner's perspective it is not always such a great idea.
But in this market you need to understand as the tenant and future buyer the danger in going into a rent to own or lease to own contract.
If the bank owns the property - that is called a bank owned property- the bank will NOT do a lease to purchase with you or a rent to own with you. They want to sell the house. So looking at bank owned properties is not a current option.
It the homeowner is doing a short sale, listed their home for sale as a short sale- that is also not a rent to own or lease to purchase prospect for you. The homeowner must get his bank to agree to take less than his mortgage amount as a payment to release the lien on the property. The bank is not interested in gaining a tenant which is what you would be and then working with you on the rent to own part.
The homeowner who owns the house free and clear is really the only reliable prospect that could perform on a lease to purchase or a rent to own.
Then there are the homeowners who owe mortgages and are making mortgage payments on their property:
The first question you need to ask yourself is, how do you know if the homeowner or landlord is going to keep making their own mortgage payments?
What would be your recourse if the person you have a lease to own or rent to own contract with goes into foreclosure or loses the property in a foreclosure proceeding?
A rent to own agreement is where you rent the property for a certain amount of time and typically a portion of your rent money goes towards your down payment and then at a specific time you get a loan to purchase the home at an agreed upon price.
You are gambling and trusting someone else that they will honor the agreement with you and also that they remain current on their mortgage payments.
If the owner does go into default you can hope that the court system remains slow as it is right now. If the owner is current now and defaults later you may have time on your side. Right now in Florida it takes about 680 days for a foreclosure to get from the starting point to when the owner loses the property.
Do not meet someone at a property and give them cash or a money order. They may be scamming you. Be aware and consult a licensed REALTOR® to show you rental properties.
We highly recommend that you hire an attorney in real estate law to discuss your remedies should the owner default. We also recommend that your attorney draw up the contract for a lease to purchase or rent to own. This way he or she may be able to place some protections for you.
Nestor Gasset and Katerina Gasset- Realtors®, CIPS, ABR, SFR, GRI, REOSInternational Properties & Investments LLCCall us today at 561-753-0135 to get your house sold.