Gaylene Rogers Lonergan is a real-estate attorney, who's based in DFW and is heavily involved with the investment community, and who knows her stuff too. She also teaches classes from time to time on creative financing and notes (the other side of creative financing).
The law was created, because several greedy sellers basically sold properties with terms that they knew most of their buyers eventually wouldn't be able to fulfill. That enabled them to resale the same house to multiple buyers. The intent of the law was prevent those greedy sellers from continuing to prey upon those buyers; however, as Darin mentioned earlier, the legislators went from one extreme to another.
I'm glad I caught your question early enough before you got a Realtor involved or started having an Attorney draw up some paperwork for you.
My associate and I specifically do Lease-to-Own deals on single family houses. My program is concentrated in Austin, TX & Savannah, GA.......He is actually in Ft. Worth, TX.
Here's the gist of the history for Texas lease options without going into a total dissertation:
Before 2005, there were problems about tenacity & conveyance. There were (mostly near the southern part of Texas) sellers taking advantage of tenant/buyers in a couple of different ways. Then ACORN (everyone's "favorite" community organization) got involved. This prompted Representative Hutton of Houston & Representative Lucio of Brownsville to draft up legislation to ban or limit lease options in Texas. Of course when you have legislators drafting up bills, of which they know very little, it's a mess. THEN....thankfully Royce West introduced Amendments to the bill that allowed it to be workable. Then Governor Perry signed it into law.
(((whew.....another deep breath)))
Basically it says that the payments must be current from the seller, they must provide mortgage information and other things like the late fees can't exceed 8% and that they can't withhold rent credits for late payments. The law also states that mortgage companies must let you do a lease option on properties. And, to my knowledge, the TREC (Texas Real Estate Commission) has not come up with specific documentation for Realtors to do lease purchases yet.
Now...that being said, my Associate (John Jackson) has been doing lease options for about 6 years in Ft.Worth VERY SUCCESSFULLY. He has about an 80% success rate for the tenant/buyers actually purchasing the house because we are proactive in helping them improve their credit while they are leasing the house with our mortgage lender & credit improvement specialist. Once again, his name is John Jackson and his website is http://www.Leasingtobuy.com. With our Lease Purchase program, these are the FREE services you get:
You get your full asking price....YOU DON'T PAY A COMMISSION, EVER!....You can keep marketing your home while we market the lease purchase....You'll have a qualified Tenant/Buyer within 45 days....And you donâ€™t worry about repairs. The tenant/buyers pay for the repairs.
His company, Leasing to Buy, is the largest lease purchase company in Texas, and is the ONLY one that's a Accredited Member of the BBB & a member of the Chamber of Commerce. He has a list of over 1000 tenant/buyers who have contacted him, at one point or another, asking about lease-to-own houses in Ft. Worth. And we do give some rent credits to the tenant/buyers as well.
If you want to shoot me an email or call me I'd be glad to go over our lease purchase program with you or you can contact John directly. If you go straight to John, let him know that I gave you a little info on his program in Ft. Worth and say hello for me. :)
Best wishes & Laus Deo,
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
You are much better off to owner finance than to lease option your home unless you own the home free and clear.
Hope this helps.
Yes, We Do Buy Houses!
You just have to structure the deal a certain way. Too many people, both buyers and sellers have had bad experiences.
I can walk you through the process.
Look forward to b being of service.
Most wise investors, who also specialize in doing deals with creative financing (Darin included), do something similar--albeit with perhaps a few minor variations. Do I know some investors who do all of this without using attorneys? Yes, I do, and that works fine for them. I've already factored in all of these costs into my business model, so that they're already priced into the deal on the buy-side.
One of my mentors said, "Investing is a team sport." Although i could do the 1 person band thing, I prefer to not do that. I prefer to focus on what I do best (aka my core business activities), and outsource the rest. This business model works well for me in IT, and it also works well for me in REI. I know plenty of other investors who take a similar approach.
I was trained by the man that founded Homevestors "We Buy Ugly Houses" and was in the picture years before it was franchised. So I have a long history of creative financing, and creating a product to fit the market. I also saw undisclosed wraps etc. send agents to jail and notes being called due when creative financing wizards thought they had all the bases covered. So I trust you have figured out how to avoid these pitfalls for your sake and the people you are helping. Again best of luck and probably this is not the fourm to discuss this anymore.
The actual line is Thou doth protest too much. :) And yes...sometimes I do. But if I don't defend lease purchases against all the cold water pouring/Negative Nelly's out there, negative and incorrect information will begin to perpetuate itself. May I refer to the quote...."Not to speak is to speak. Not to act is to act."
I'm certainly glad to hear that you fulfilled your fiduciary responsibility to your client. I wish more Agents would follow your lead and also have the years of experience under their belts to boot.
I would love to give the intimate details of our lease purchase program but as they say in the 2008 movie Kung Fu Panda...."I don't know if you're ready to be entrusted with the secret ingredient of our secret ingredient soup." :) Just kidding. It just comes from studying the Amendments to HB1823, knowing which sections do and do not apply and then correlating it to our specific business model.
FYI The seller of the home I talked about had been my client when I sold him the house. I could not sell it for him 4 months later when his life took a turn and he could not keep it. I advised him to lease it until he could sell and that is how he ran into the "lease to own deal" when his house was foreclosed upon. He thought he did not own it anymore. I wasn't asked my opinion when he entered into that agreement. In fact I thought he took my advice and just leased it. I would love to hear your program and how it correlates to the law.
Not to sound harsh but.....
"I HAVEN'T studied all the angles in years BUT....."
"....we USED TO encounter..."
"...when you agree to give them credit for down payment...." = That's why it's called Option Consideration.
"We USED TO have some loan companies in the 80's..." = 3 DECADES AGO
"...documentation was very strict..." = are we still talking about the 1980's?
"...anything over that amound paid to the landlord could be used as credit..." = Sellers concessions (using Rent Credits) can't exceed 3% at close for most financing.
"...and I DON'T KNOW if this can be done at this time."
"I have been TOLD there are a bunch of scams out there..."
"One of my clients decided to use one of those companies..." = Name and Location of the company? And if he was your CLIENT and not a customer, then didn't you have a fiduciary responsibility to counsel him as to any material risks?
and the only thing I actually agree with..........
"I urge you not to do this without a reputable real estate attorney." = We've had Attorney's put together our paperwork and contracts as well as having a letter from the TREC that says what WE DO is perfectly fine. And thus, I can only speak for myself and John. You can take our paperwork to your Attorney to look over if you like (we've encouraged the hundreds of people in the program to do that and it's actually IN OUR CONTRACTS THAT YOU DO SO), but just remember..... Even reputable Attorneys have "looked over" paperwork and tried to amend it only to have their "additions" or "amendments" be completely ILLEGAL because they have not studied House Bill 1823. :)
I have been told there are a bunch of scams out there causing people to lose their homes. One of my clients decided to use one of those companies and actually went to a title company and signed some papers. Subsequently he later found out the house was foreclosed upon and it was still in his name. Now he has a foreclosure on his record. I urge you not to do this without a reputable real estate attorney. Feel free to call me 817 980-1047
Thanks for the clarification, however as most Realtors will tell you, Zillow is not typically a reliable source. Our local MLS is the most reliable. If you would like to send me the particulars of your home, I would be happy to give you days on market for your particular home amenities, as well as how many are on the market. This is a free service, with no obligation on your part. No pressure from me, I just want you to have the proper information so you can make the best decision for your situation. Thanks again!
Jackie Rankin the reason I think homes aren't selling in this zip code is because when I check Zillow for recent sales I see 12 recent sales (last week this was 2 -one a $120K house sold for $60K) and 448 for sale.
As further info I still owe about $11K on this house but could pay this off tomorrow if necessary. I probably won't be putting it on the market until January.
The good attorneys I know say don't lease/purchase or lease to own. You can put the home up for lease or sale at the same time. They need not be mutally exclusive. The problem we most often see is that the people who are the potential buyers, never can get qualified. Also many lenders won't allow the rent credit. You might check with your local bank to see if they would allow.
There are a couple of options. If you can get it rented you can then sell to an investor who wants turnkey properties. Rent it for your own long term income, or price it to sell.
Why do you think that homes aren't selling in the 76137 zip code? Overall statistics for all of 76137 (in the past 6 months) is an average of 84 days on the market. That is less than 3 months on the market. Those statistics can vary based on your home size, condition, and age, but the 84 days take into consideration every home in 76137 in the past 6 months. If you'd like more information on your homes market value, etc. just let me know. I'd be happy to do a free analysis and let you know where you stand in the market. Thanks and I wish you much success!!
Tru Value Realty
Dont hesitate to call with more questions.