(Expert Tips and Secrets About the Paperwork)
I’m a huge believer in the sandwich lease to purchase investment method. I’m just as adamant about writing the lease option forms and contracts in an ethical and straightforward manner. Even if you’re working on your first sandwich lease option deal, you have much more knowledge and information about the process than the typical seller or tenant/buyer. After all, you’ve thoroughly studied the subject but this is most likely a new and creative opportunity for the seller and first-time buyer.
You enhance your reputation, your business’s reputation, and the integrity of each deal when you make sure the seller and buyer fully understand the legal structure of the deal and the obligations of all parties to the lease option and contracts. A good way of firmly impressing this on buyers is by starting each contract with a statement similar to:
This is a legally binding document. If you desire legal or tax advice regarding this Lease Agreement with Option for Purchase, including all addenda, and attached exhibits (collectively referred to below as this “Contract”), you are advised to consult with your attorney or tax adviser prior to signing this Contract.
An Easy to Understand Proposal Gets Your Profits Rolling!
Your Proposal to the Seller
It all begins with my proven script to generate the initial interest in the benefits that you offer. The conversation begins as if you are a traditional buyer (or you disclose you are a realtor). Once you have their attention, you can offer them a creative proposal.
- Your goal is getting the seller on the same page as you without creating confusion with a bunch of legal lease option forms and contracts.
- Keep the proposal easy to understand with highlights, not technical terms.
- Some sellers are comfortable just talking about the proposal without having it in writing – not a problem.
- It might help to have a conversation in person rather than over the phone.
- Emailing the proposal is also a good option.
The Lease Option is a New Concept for Sellers
Memorandum of Lease Option
This is where the formal lease option forms and contracts begin and negotiations are typically still part of the process. You want to negotiate with integrity. You’re looking for a win-win with the seller. This is not about the seller losing as much as possible and you winning everything.
Here are the basics to the memorandum for a lease option:
- All sellers listed on the title or deed must sign it.
- It has to be notarized.
- You can record it in public records.
- Recording the paperwork clouds the seller’s title (encumbers the title).
- You want the authority to check the mortgage payment status at any time.
- You need an Affidavit Regarding Lien – unknown debt (may have different names in different states).
- Other standard forms:
- Seller disclosure (or similar name in other states).
- Lead-based paint (HUD website).
- Anything else required by your state.
This is part of your due diligence but not all of it. By the time you are finalizing the option agreement contract (but before signing), you need to complete all of your due diligence.
The seller is going to want to read the paperwork and maybe have an attorney review it before signing. That means negotiations and clarification are probably going to continue until the lease option forms and contracts are signed. Here are some basic guidelines for negotiating sandwich lease options and forms with the seller:
- Know what your goal is from the beginning and what is important to you.
- Remember, you are looking for a win-win. It’s not about the seller losing and you winning everything.
- You are not guaranteeing that the mortgage will be paid off (that is why it is an option).
- You are taking over the payments and the maintenance (during the lease option). You pass these responsibilities on to the tenant/buyer in the second set of paperwork.
- Be prepared to begin making the payment as soon as you have a tenant in place (but preferably not before). But, be prepared to continue making the payments if the tenant vacates the house. With correctly written sandwich lease forms and contracts, you can quickly put another tenant in the house if needed.
- It can be a good idea to let the seller know an estimate of when the buyer might qualify for a mortgage (complete the purchase) but you can’t know this until you have a tenant in the house.
- Before writing the lease option forms and contracts, be sure you know your state and local legal requirements.
Negotiate with Integrity – don’t promise what you can’t deliver.
You might present two or three different versions of the option memorandum (but finalize only one). However, you should have most of it narrowed down during the proposal phase. Still, it’s not uncommon to have a few final details that need to be ironed out in the legal memorandum. A good reason for offering different versions is to demonstrate that lease option purchases can be both creative and flexible. You might try different lengths of the option period. Or you can try different option fee amounts with different monthly rent amounts. You can also try something even more creative. When a seller shows more interest in one version than another, it helps you understand what is important to the seller. These variations and many others (with details and examples) are all in the comprehensive course material.
- Investing In Real Estate With Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- You’re Wealth Building Arsenal.
- Add Personalized Coaching.
- Cooperative Lease Options.
- Expand to Get the Deed “Subject To.”
- Round it all out by Working with Realtors.
By Wendy Patton
For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.
If you found this information useful, please visit again soon at wendypatton.com.
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