Profile picture for sugarhill9

My landlord wants me to buy her side by side duplex,

with 10,000 down and i would take over the payments for the next 15 years. she wants to do a lease with option contract, is this legal if she still owes money on her morgage. Or is this a bad idea.
  • June 28 2011 - South Saint Paul
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Answers (10)

Bad idea...  First off, the vast majority of mortgages these days are not assumable.  In Minnesota, the Contract for Deed option is well supported in the law, but she would have to own the property free and clear in order to enter into a Contract for Deed.

This sounds like it me be one of the many "Lease to Own" schemes that have been going around.  If you REALLY want to purchase this property, it would be purdent to get a regular mortgage and purchase it as you would any other property.

This kind of situation blurs the lines between Tenants / Buyer and Landlord / Seller.  There can be many pitfalls and it puts your $10,000 downpayment at risk.

And it just smells fishy...  There are plenty of great deals in South St Paul these days.  You are very likely to find something nice for that amount of downpayment.

Here is a URL that might help you: http://www.ag.state.mn.us/Consumer/Housing/Default.asp
The Homebuyer's Handbook is a great place to start.

Whatever you decide to do, make sure there is a clear distinction... Are you a home buyer or a tenant?  It makes a big differece.  The laws for each situation are completely different and you want to make sure you are not taking too big of a risk.

I hope that helps! 
  • July 18 2011
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Profile picture for COREXRE
6-29-11

I would recommend that you move with great caution on a deal of this nature. You've received some great advise in the replies back to you.  Definitely seek the advise of an attorney (find a well respected and recommended attorney who deals in real estate legal issues).  I also believe speaking to a local area realtor is a good move to see what else may be on the market and at 'what' prices and terms.  There may be a much better deal waiting for you out there.  Finally:  Don't rush into something like this without first doing a great deal of 'due diligence'!!
  • June 29 2011
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Consult an attorney on the legality side of it... from my experience I have seen people arrested for taking over payments.  No joke.  It's happened in NC.

Sounds like your landlord wants out and wants you to start bailing.

So what happens when she sells the property that you have been making payments on?

This just smells to me.
  • June 29 2011
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you need to finance your own loan and not "take over" someome elses notes.. What if this person does not apply your payment to the loan ?? or wht if she dies and the family inherits the property?? then what ?? Don't wallk away from this type of arrangement....run!  If youw ant the place ...buy it the right way!
  • June 29 2011
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I would definitely find out how much she owes and the remaining time on the loan. I have never had anyone put down $10,000 as a lease option. A lease option is where you have the "option" to purchase the home. That sounds more like owner financing and $10,000 is your down payment. If I were you I would consult with an Attorney who specializes in Real Estate transactions to review her mortgage documents and structure the transaction so everyone is covered.
  • June 29 2011
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Wetdawg is certainly right on there!

I would think a "faciliator" agreement would be fair and more a flat fee if you would like someone to just help with this transaction. A realtor can still have your best interest and make sure you are not getting the short end of a stick.

$10,000 to me seems high and assuming the payments feels a little on the risky side (especially in this economy!). Would need to know more information.

However I will say if you can afford that big of a down payment a twin home is most likley not your best option purely from a resale standpoint.

sure, they work great for rentals or in this situation a owner renting out the other side. From a traditional buyer stanpoint I am not a big fan and that is just my opinion.

Hope it all works out for you!
  • June 29 2011
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Profile picture for Joe Houghton
There are so many different ways to structure lease option contracts....there is probably a legitimate and legal way, but where a lot of people go wrong is in the terms and the value of the property.... Usually tenants turning into buyers over-pay because they don't explore all of their other options.
  • June 28 2011
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Profile picture for nwhome.us
Interview a few real estate agents in your neighborhood and pick someone that you feel you can trust.  They should only require a commission on one side of the transaction (yours) and that could come from either you or the seller.  Find someone who is familiar with this type of transaction, though it isn't uncommon it requires a little extra experience in working directly with an unrepresented seller and helping both parties reach a satisfactory result.  Have fun.
  • June 28 2011
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You have to ask yourself, is this the best deal for me??
  • June 28 2011
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Profile picture for wetdawgs
Many  mortgages are not assumable, so you'd have to do some investigating.   Even when a mortgage is assumable, you'd have to qualify.

If she owes more than the place is worth, say "thanks, but no thanks". 
  • June 28 2011
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