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Lease Purchase Agreements in North Carolina

by TeamForYOURDreams

I have an LLC that purchases properties using lease options and have been doing that for years.  One of them is coming up on a decade.  The use of lease purchases or lease options his highly regulated in North Carolina. Here is a link to the law on lease purchases in North Carolina.  It is not hard to draft an agreement that complies with the law because the statute gives you a checklist of what is required.   http://www.ncga.state.nc.us/EnactedLegislation/Statutes/PDF/ByChapter/Chapter_47G.pdf.   In North Carolina, the real estate commission has said that Realtors cannot draft lease option and lease purchase agreements, you need to hire a lawyer to avoid engaging in the unauthorized practice of law.


The law in North Carolina came into effect to cure the problem where landlords would take a large option payment from a tenant, sign a lease purchase agreement, then not pay the mortgage while they were collecting the rent.  I had one of  these where the tenant was a heavily armed bounty hunter.  The lender foreclosed and the lender called me after their regular Realtor for that area called them in tears after the bounty hunter explained to her that if she was involved in throwing him out of the house, he would spend the rest of his life hunting her down.  To say he was upset is an understatement and rightfully so because he had paid the landlord thousands in an option payment and pre-paid his rent with additional thousands.  I took the assignment and it all worked out.  He is not hunting me down, other than he wants me to help him buy a house in the future.  As a result of situations like this, the NC law gives the tenant/buyer the right to terminate the agreement and get a refund of the option payment. If you are the one buying the property with the lease/purchase, the termination provision is not a problem.  If you or your client are selling to a third party, there may be an issue caused by the refund provision for the option money  


When you buy a property with a lease option, one thing to remember is the title is still in the sellers' names.  If the sellers get a judgment against them, it can become a lien on the property which could affect the tenant/buyer's ability to close the sale.  Also, you need to set up a system where the tenant/buyer is sure that the landlord/seller pays the mortgage.  I trust my seller's completely (one is my son, the other is the son of a friend), so I do not have to worry about this.  On my son's property, I pay the mortgages directly and the lender has no heartburn about the fact that the check has a different Burrell's name on it.  Other lenders might get weird on you and try to stretch the "due on sale" clause to say that there is enough of a transfer of an interest in the property to call it a default under the terms of the deed of trust.  However, that is extremely unlikely because the lender is getting paid and there is not enough of a transfer of an interest in the property.

One third of all  loan applications get turned down.  Many of the applicants are good borrowers, but the regulations on loans are getting too strict.  If you have a situation like this, a lease purchase or a lease option might be the right tool to solve the problem.

 

Interview on Negotiating

by TeamForYOURDreams

Patrick Lilly is a successful Realtor in New York who leads an exciting group called Real Estate Success Rocks.  He interviewed me on Negotiation Strategies.  It was a wide ranging discussion from negotiaging styles (collaborative vs. Trump style), how to negotiate with bullies and the tools that Realtors need to succeed.  You can listen to the entire interview at http://repodcast.rocks/033-negotiation-strategies-with-tim-burrell/ .  I hope you like it.

They are buying my negotiating book in Australia

by TeamForYOURDreams

About a week ago, I sent a copy of  my book, Create A Great Deal, the Art of Real Estate Negotiating, to a woman in Australia.  She must have passed the word around, because I just got an order asking for the immediate shipment of 10 copies and an additional purchase of 100 copies.  Most of my sales are to readers in the United States and I have sold a lot of the books in Canada  However, this is such fun to have Australia get excited about it. 

Don't Gloat When You Negotiate

by TeamForYOURDreams

My latest article with Inman News just came out.  When you negotiate, do not gloat over your victories.  Instead, make the other people involved fee that they did well.  Point out every concession you make so that they can value the victory that they accomplished.  When they feel that they have gained something, they will be more willing to let you gain something in return.  To read the entire article with stories about my clients, go to http://tinyurl.com/pyd6aqo  

Displaying blog entries 1-4 of 4

Contact Information

Photo of Team For Your Dreams, Inc. Real Estate
Team For Your Dreams, Inc.
REMAX United
7721 Six Forks Road, Suite 110, Raleigh, NC 27615
Raleigh NC 27615
919-846-3272
919-812-5111
Fax: 310-347-4041