Hey All….
Well I was just driving and singing along to the radio (poorly mind you) when I was interrupted by an idea….
Is it legally possible to create a type of IF/THEN contract ?
For example, if I am looking at a property to Vendor Finance to a ‘client’ can I create a pre-settlement contract on the basis of “if the purchaser (lessor) settles on the said property then the lessee(wrapee) will go ahead with the lease/option(wrap)”
Just a thought on a way to mitigate some risk of purchasing a property then the lessee backing out of the deal?
Any thoughts will be great…
Pete
…Beware of the dreamtakers…
Would be nice, but you may have a hard time getting a vendor to take a house off market on that basis.
You could do it if you had say 2 weeks, then it’s just like a finance clause. Up to the last minute, I doubt it.
Good luck anyway.
Simon.
Clarifying –
I am trying to get this contract between myself (the property purchaser) and the potential lessee – NOT with the properties vendor…
In other words; get the property “under contract” with an out clause, say finance or due diligence, then during this period qualify my lessee/warpee and get them to agree that if I proceed and settle on the property they WILL do the L-O/Wrap deal with me….
…Beware of the dreamtakers…
If you find your wrapees first you could sign them to a contract agreeing to purchase a particlur property if settled upon by you.
ie: the property would be of the wrapees choice in the first place so they should have no problem with this.
“All the world’s a stage, and you choose the role you want to play on that stage” William Shakespearthanks leigh…
…Beware of the dreamtakers…
Hi Willi,
I’m not sure, but I doubt you would be able to do this.
After all, how can you sign a contract of sale with the person you’re doing the wrap for, if you don’t own the property to sell.
I’m pretty sure you need to own it to be able to sell it.
I guess you could make a contract with someone for an intent to purchase, but I don’t think it would be legally binding (meaning you’d have no recourse if they just walked away).
A solicitor should be able to give you a yes/no answer on this.
Gordon
Gordon,
I totally understand I can’t get the lease/option under contract until I own the underlying property.
As you pointed Gordon, my intent was to get them to sign an “intent to deal contract” – and if this is valid/concrete agreement..
Pete
…Beware of the dreamtakers…
Sorry my post was only meant to come across as an idea. I haven’t checked this with a my solicitor yet, but i’m looking at doing similar things so i’ll keep you posted on what i find out. Should be arranging a meeting in the next 2 weeks.
Good point of note Gordon, always run all information given to you by others past your solicitor before using it in your investments.
Cheers [
]will do mate, will do
Pete
…Beware of the dreamtakers…
Sounds like you’re discussing what Dolf DeRoos calls a “Heads of Agreement”. Dolf used this to get a tennant for a commercial property (a funeral parlour!) signed up before the property was purchased. He then took the (low) asking price for the (vacant) property and the contract showing that the income secured will massively raise the value of the property. Based on that he was able to negotiate to get the property valued on the higher amount making it CF+
Quasimodo [^]
__________________________________________________
It seems to me that action has a most magic way of answering all the questions our fearful mind tries to throw before us…
__________________________________________________Hi Willi
This is what I think, I’m not a solicitor and if I am wrong please someone let me know, but from my understanding, you can not undertake to or sign any agreement on residential property that you do not own.
I really dont think you could get a solicitor to draw up that sort of a contract even if it falls outside the constraints of property purchasing.
I really think it would be too involved and too expensive to be of any benefit.
If you have found someone who is really interested in purchasing a property under vendor finance and they agree on the property before you purchase it, you really shouldnt have too many problems.
whj
Quasimodo you are spot on…i actually have dolf’s cd set and should have realised/remembered that myself…thanks for pointing it out…
Cheers
Pete…Beware of the dreamtakers…
Hi willi,
My brain is not working at full speed this time of night, but i seem to remember reading somewhere that contracting to enter into a future contract is not legally binding.
Eg if you were to draw up a contract with a potential wrapee to enter into an installment contract/ lease option agreement in the future, it would not be binding.
I am not sure how Dolf uses his ‘heads of agreement’, but may be worth having a quick chat to your legal team before relying on it.
would be interesting to know if you take this idea further. Keep us posted!!!
Cheers,
Nathan
I Thought the whole idea of a lease purchase arrangement was to lease a property off a property owner with and option to purchase and sub lease that property out to a third party who also takes an option with me.
I then sub lease the proeprty to a tennant buyer and give them an option to purchase the proeprty from me for an agreed price.
When my tennant buyer excerises their option with me; i then excerise my option with the property owner and purchase the property from them and in turn sell the property to my tennant buyer.
I thought this was the very basis of lease options. Have i missed something?
honky
Hiya,
Hey Nathan! [
]
Along the lines of Stu’s thinking from APIM. It may not be worth the paper it’s written on, but psychologically…My pennies worth
Sleep Tight
Sooshie [
]“Giving is a Blessing, receiving is the bonus”
]
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