REAL ESTATE CONTRACTS METHODS AND TECHNIQUES
| LAND CONTRACT / LAND TRUST / REAL ESTATE CONTRACT: Land contract /contract for deed or "installment sale agreement") is a contract between the owner of the real property (called the "vendor" or the "seller") and a person who wants to buy the property (the "vendee", "contract purchaser", "purchaser" or "buyer")for an agreed-upon purchase price. Under a land contract the vendor grants equitable title to the vendee (which consists of virtually all rights to the property other than actual legal title), and the vendee agrees to pay the purchase price to the vendor over time, usually in monthly installments, by a certain date. When the full amount of the purchase price is paid, the vendor is obligated to deliver legal title to the vendee by an actual deed, and upon delivery of the deed, the vendee owns equitable and legal title to the property. Equitable title, for all intents and purposes, makes the purchaser the "owner" of the property. There are several "land contract friendly" states in the US, while other states make it extremely difficult to sell or purchase real property by means of a land contract. It is common for the installment payments of the purchase price to be similar to mortgage payments in amount and effect. The amount is often determined according to a mortgage amortization schedule. In effect, each installment payment is partially payment of the purchase price and partially payment of interest on the unpaid purchase price. This is similar to mortgage payments which are part repayment of the principal amount of the mortgage loan and part interest. However, since land contracts can easily be written or modified by any seller or purchaser, you may come across any variety of repayment plans. Interest only, negative amortizations, short balloons, extremely long amortizations just to name a few. It is therefore even more so advisable to read your contracts and consult professionals. Typical land contracts are easy to understand and usually only make up 3-5 pages. It is not uncommon for land contracts to go UNrecorded. For several reasons the vendor or vendee may decide that the contract is not to be recorded in the register of deeds. This does not make the contract invalid, but it does increase exposure to undesirable side effects. Contrary to common belief, a contract is valid with only a vendors' signature, provided it is delivered and accepted by the vendee. Contracts without the vendee's signature, or without being notarized - although not recommended- are therefore still valid and enforceable in court. Although land contracts can be used for a variety of reasons, their most common use is as a form of short-term seller financing. Usually, but not always, the date on which the full amount of the purchase price is due will be years sooner than when the purchase price would be paid in full according to the amortization schedule. This results in the final payment being a large "balloon" payment. Since the amount of the final payment is so large, the buyer usually obtains a conventional mortgage loan from a bank to make the final payment. Land contracts are sometimes used by buyers who do not qualify for conventional mortgage loans offered by traditional lending institutional, for reasons of poor credit or an insufficient down payment. Land contracts are also used when the seller is anxious to sell and the buyer is not given enough time to arrange for conventional financing. Besides the obvious reasons, land contracts are a favorite amongst many real estate investors because of their ease of use, extreme flexibility, and fast executions. |
LAND TRUST
A land trust is an agreement whereby one party (the trustee) agrees to hold ownership of a piece of real property for the benefit of another party (the beneficiary). Land trusts are used by
nonprofit organizations to hold conservation easements, by corporations and investment groups to compile large tracts of land, and by individuals to keep their real estate ownership
private, avoid probate and provide several other benefits.
A community or conservation land trust is an organization established to hold land and to administer use of the land according to the charter of the organization. A land trust is a useful
way to manage complex divisions of the that people can own in real estate, and can be used to manage something as large and complex as a multi-state REIT, or as common and
small as a single-family home.
Corporations sometimes set up land trusts when they want to compile large tracts of land without arousing suspicion or alerting people to their plans (which would cause the asking
price to rise). For example, the land for Walt Disney World near Orlando Florida was put together by using many land trusts to buy smaller tracts of land.
Individuals use land trusts mainly for privacy and to avoid probate. No one knows what one's bank balance or stock investments are, yet anyone with an internet connection can look up a
person's real estate holdings. A person who has an auto accident or a doctor who accidentally injures a patient is a much better target for a lawsuit if he or she owns real estate
investments. So some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to
their heirs at the moment of death, rather than go through a long probate process.
A land trust is an agreement whereby one party (the trustee) agrees to hold ownership of a piece of real property for the benefit of another party (the beneficiary). Land trusts are used by
nonprofit organizations to hold conservation easements, by corporations and investment groups to compile large tracts of land, and by individuals to keep their real estate ownership
private, avoid probate and provide several other benefits.
A community or conservation land trust is an organization established to hold land and to administer use of the land according to the charter of the organization. A land trust is a useful
way to manage complex divisions of the that people can own in real estate, and can be used to manage something as large and complex as a multi-state REIT, or as common and
small as a single-family home.
Corporations sometimes set up land trusts when they want to compile large tracts of land without arousing suspicion or alerting people to their plans (which would cause the asking
price to rise). For example, the land for Walt Disney World near Orlando Florida was put together by using many land trusts to buy smaller tracts of land.
Individuals use land trusts mainly for privacy and to avoid probate. No one knows what one's bank balance or stock investments are, yet anyone with an internet connection can look up a
person's real estate holdings. A person who has an auto accident or a doctor who accidentally injures a patient is a much better target for a lawsuit if he or she owns real estate
investments. So some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to
their heirs at the moment of death, rather than go through a long probate process.
LEASE OPTION CONTRACT
A lease option (or lease purchase) is a type of contract used in residential real estate. The contract is typically between two parties: the tenant (also called the lessee), who will
occupy a house or apartment, and the landlord (lessor), who owns the property.
During the term of the lease option, the tenant pays rent to the landlord, and in exchange is permitted to occupy the property. At the end of the contract, the tenant has the
option to purchase the property outright; the tenant would typically obtain the money to do this using a mortgage. In exchange for this option, the tenant pays extra money to the
landlord, in excess of usual market rent.
Excess rent may also be applied towards the eventual purchase of the property, or towards the down payment for a mortgage. In that case, the lease option works as an
automatic savings plan for the tenant.
Lease options are often used by tenants with a poor or limited credit history, who would not qualify for a typical mortgage. The lease option may carry less risk for the landlord
than a mortgage would for the lender. In the event of non-payment, it may be possible to remove the tenants through eviction, which is likely to be cheaper than foreclosure on a
mortgaged property. The lease option may also require less money up front, while a mortgage might require a substantial down payment from the tenant.
If the tenant does not exercise the option to purchase the property at the end of the lease, then the money that the tenant paid for this option was wasted. This might occur if
the tenant no longer wishes to purchase the property, or if the tenant wishes to purchase the property but is unable to obtain the financing required to do so. Some forms of
lease option have been criticized as predatory, if a lease option is sold to a tenant who cannot realistically expect to ever exercise the option
A lease option (or lease purchase) is a type of contract used in residential real estate. The contract is typically between two parties: the tenant (also called the lessee), who will
occupy a house or apartment, and the landlord (lessor), who owns the property.
During the term of the lease option, the tenant pays rent to the landlord, and in exchange is permitted to occupy the property. At the end of the contract, the tenant has the
option to purchase the property outright; the tenant would typically obtain the money to do this using a mortgage. In exchange for this option, the tenant pays extra money to the
landlord, in excess of usual market rent.
Excess rent may also be applied towards the eventual purchase of the property, or towards the down payment for a mortgage. In that case, the lease option works as an
automatic savings plan for the tenant.
Lease options are often used by tenants with a poor or limited credit history, who would not qualify for a typical mortgage. The lease option may carry less risk for the landlord
than a mortgage would for the lender. In the event of non-payment, it may be possible to remove the tenants through eviction, which is likely to be cheaper than foreclosure on a
mortgaged property. The lease option may also require less money up front, while a mortgage might require a substantial down payment from the tenant.
If the tenant does not exercise the option to purchase the property at the end of the lease, then the money that the tenant paid for this option was wasted. This might occur if
the tenant no longer wishes to purchase the property, or if the tenant wishes to purchase the property but is unable to obtain the financing required to do so. Some forms of
lease option have been criticized as predatory, if a lease option is sold to a tenant who cannot realistically expect to ever exercise the option
NET LEASE CONTRACT
Single net lease
In a single net lease (sometimes shortened to Net or N), the lessee or tenant is responsible for paying property taxes as well as the base rent. Double- and triple-net leases are
more common forms of net leases.
[Double net lease
In a double net lease (Net-Net or NN) the lessee or tenant is responsible for real estate taxes and building insurance. The lessor or landlord is responsible for any expenses
incurred for structural repairs and common area maintenance. "Roof and structure" is sometimes calculated as a reserve, the most common amount is equal to $ .15 per square
foot. Double net leases are rarely used in the industry.
Triple net lease
A triple net lease (Net-Net-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the
three 'Nets') on the property in addition to any normal fees that are expected under the agreement (rent, etc.). In such a lease, the tenant or lessee is responsible for all costs
associated with repairs or replacement of the structural building elements of the property.
Although rents are usually lower in triple net leases than other forms of lease agreements, this form of lease agreement is desirable for real estate investors since the expenses
incurred on the investor are dramatically decreased due to the transfer of financial responsibilities on the property from the investor/lessor to the lessee. But they may also have
certain tax disadvantages for the lessor. Among other effects, if the lease produces losses, these could be disallowed for their tax benefit due to the passive loss limitations of
the Internal Revenue Code Section 469 or the at-risk rules of IRC §465, and significant income from them could cause a closely held C corporation to become a Personal Holding
Company per IRC §542 (subject to a special tax), or an S corporation to lose this status per IRC §1362(d)(3).
This form is frequently used for freestanding buildings, such as outparcel developments or single-tenant "big box" sites.
Use of a triple net lease may be a prerequisite for credit tenant lease financing, and may permit a lender to lend to the landlord on nonrecourse terms.
Bondable lease
A bondable lease (also called an absolute triple net lease or a "hell-or-high-water lease") is the most extreme variation of a triple net lease, where the tenant carries every
imaginable real estate risk related to the property. Notably, these additional risks include the obligations to rebuild after a casualty, regardless of the adequacy of insurance
proceeds, and to pay rent after partial or full condemnation. These leases are not terminable by the tenant, nor are rent abatements permissible. The concept is to make the rent
absolutely net under all circumstances, equivalent to the obligations of a bond: hence the "hell-or-high water" moniker. An example of this type of lease would be a leaseback
arrangement in which a retailer leases back the building it formerly owned and continues to run the store.
Bondable leases are typically used in so-called "credit tenant lease" deals, where the main driver of value is not so much the real estate, but the uninterrupted cash flow from the
usually investment-grade rated "credit" tenant.
Single net lease
In a single net lease (sometimes shortened to Net or N), the lessee or tenant is responsible for paying property taxes as well as the base rent. Double- and triple-net leases are
more common forms of net leases.
[Double net lease
In a double net lease (Net-Net or NN) the lessee or tenant is responsible for real estate taxes and building insurance. The lessor or landlord is responsible for any expenses
incurred for structural repairs and common area maintenance. "Roof and structure" is sometimes calculated as a reserve, the most common amount is equal to $ .15 per square
foot. Double net leases are rarely used in the industry.
Triple net lease
A triple net lease (Net-Net-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the
three 'Nets') on the property in addition to any normal fees that are expected under the agreement (rent, etc.). In such a lease, the tenant or lessee is responsible for all costs
associated with repairs or replacement of the structural building elements of the property.
Although rents are usually lower in triple net leases than other forms of lease agreements, this form of lease agreement is desirable for real estate investors since the expenses
incurred on the investor are dramatically decreased due to the transfer of financial responsibilities on the property from the investor/lessor to the lessee. But they may also have
certain tax disadvantages for the lessor. Among other effects, if the lease produces losses, these could be disallowed for their tax benefit due to the passive loss limitations of
the Internal Revenue Code Section 469 or the at-risk rules of IRC §465, and significant income from them could cause a closely held C corporation to become a Personal Holding
Company per IRC §542 (subject to a special tax), or an S corporation to lose this status per IRC §1362(d)(3).
This form is frequently used for freestanding buildings, such as outparcel developments or single-tenant "big box" sites.
Use of a triple net lease may be a prerequisite for credit tenant lease financing, and may permit a lender to lend to the landlord on nonrecourse terms.
Bondable lease
A bondable lease (also called an absolute triple net lease or a "hell-or-high-water lease") is the most extreme variation of a triple net lease, where the tenant carries every
imaginable real estate risk related to the property. Notably, these additional risks include the obligations to rebuild after a casualty, regardless of the adequacy of insurance
proceeds, and to pay rent after partial or full condemnation. These leases are not terminable by the tenant, nor are rent abatements permissible. The concept is to make the rent
absolutely net under all circumstances, equivalent to the obligations of a bond: hence the "hell-or-high water" moniker. An example of this type of lease would be a leaseback
arrangement in which a retailer leases back the building it formerly owned and continues to run the store.
Bondable leases are typically used in so-called "credit tenant lease" deals, where the main driver of value is not so much the real estate, but the uninterrupted cash flow from the
usually investment-grade rated "credit" tenant.
www.knowledgefinancial.com
Contact us for all your real estate
financing, mortgage & loans, home
refinancing, home equity
------------------------------------------------------------------------------
YOU HAVE QUESTIONS ABOUT:
HOME BUYING,
HOME SELLING,
HOME REFINANCING.
WE HAVE ANSWERS WAITING FOR YOU!
------------------------------------------------------------------------------
REAL ESTATE INVESTMENTS,
MORTGAGE & LOANS. FINANCING,
REFINANCING. WE'RE HERE TO HELP!
financing, mortgage & loans, home
refinancing, home equity
------------------------------------------------------------------------------
YOU HAVE QUESTIONS ABOUT:
HOME BUYING,
HOME SELLING,
HOME REFINANCING.
WE HAVE ANSWERS WAITING FOR YOU!
------------------------------------------------------------------------------
REAL ESTATE INVESTMENTS,
MORTGAGE & LOANS. FINANCING,
REFINANCING. WE'RE HERE TO HELP!
| REAL ESTATE INVESTMENTS,HOUSES,CONDOS, TOWN-HOMES, FORECLOSURE, SHORT SALE. CALL FOR ADVICE |
| MORTGAGE LOAN PRE-QUALIFICATION, HOME REFINANCING,HOME EQUITY, REAL ESTATE FINANCING. CALL AT VISION MORTGAGE BANK. |
REAL ESTATE FINANCING: We specialize in real estate
financing , mortgage and loans, home refinancing, home
equity.
If you just only thinking about real estate, we assure you
that we can fulfill your need .
You can count on us, we will assist you throughout the
home buying process,
We will work hard to get you a mortgage loan to fit your
need according to your situation.
We will provide you all the information you will need to be
successful in your transaction
We guaranty you complete satisfaction
financing , mortgage and loans, home refinancing, home
equity.
If you just only thinking about real estate, we assure you
that we can fulfill your need .
You can count on us, we will assist you throughout the
home buying process,
We will work hard to get you a mortgage loan to fit your
need according to your situation.
We will provide you all the information you will need to be
successful in your transaction
We guaranty you complete satisfaction
HOME BUYING
Even if housing prices don't continue to increase at the
torrid pace seen in recent years in many areas, buying
a home can be a good financial investment. Making
mortgage payments forces you to save, and after 15 to
30 years you will own a substantial asset that can be
converted into cash to help fund retirement or a child's
education. There are also tax benefits
------------------------------------------------------------------------------
Real Estate is a road-map to riches, it’s one of the way
to build wealth. The ultra rich always invest in real
estate.
There is no better investment than real estate
despites the ups and downs, it outperformed all other
investments.
Real Estate is nothing but a passport to wealth !
Even if housing prices don't continue to increase at the
torrid pace seen in recent years in many areas, buying
a home can be a good financial investment. Making
mortgage payments forces you to save, and after 15 to
30 years you will own a substantial asset that can be
converted into cash to help fund retirement or a child's
education. There are also tax benefits
------------------------------------------------------------------------------
Real Estate is a road-map to riches, it’s one of the way
to build wealth. The ultra rich always invest in real
estate.
There is no better investment than real estate
despites the ups and downs, it outperformed all other
investments.
Real Estate is nothing but a passport to wealth !
DREAM INTO REALITY If you ever dreamed of owning your
own home, or another home, or an investment property.
Let us help you make it a reality.
If you currently own a home, but have questions
regarding your mortgage.
Let us analyze the loan and determine if it suitable for your
current situation, or to see what can be done.
-----------------------------------------------------------------------------------
Let us help you purchase your property in the area you
prefer for the price you can afford.
Contact us to pre-qualify you first. Pre-qualification will
put you in a stronger position to negotiate with sellers
and become closer to reach an agreement on the
purchase price.
own home, or another home, or an investment property.
Let us help you make it a reality.
If you currently own a home, but have questions
regarding your mortgage.
Let us analyze the loan and determine if it suitable for your
current situation, or to see what can be done.
-----------------------------------------------------------------------------------
Let us help you purchase your property in the area you
prefer for the price you can afford.
Contact us to pre-qualify you first. Pre-qualification will
put you in a stronger position to negotiate with sellers
and become closer to reach an agreement on the
purchase price.
We’re here to turn traditional renters into
property owners and landlords.
We’ve great desire to help people find the
right mortgage loan at the lowest rate
possible.
property owners and landlords.
We’ve great desire to help people find the
right mortgage loan at the lowest rate
possible.
We take the time to analyze every individual situation
and needs to find the best mortgage loan.
Whether you’re a first time home buyer or an
experience buyer, we work hard to find you the home
loan you desired.
and needs to find the best mortgage loan.
Whether you’re a first time home buyer or an
experience buyer, we work hard to find you the home
loan you desired.
We have a wide range of home loan options on primary
residences, second homes, and on investments property.
----------------------------------------------------------------------------------
In the Mortgage and in the Real Estate industry I have
positioned myself as a key contributor in helping people
realized their dreams.
Call us
residences, second homes, and on investments property.
----------------------------------------------------------------------------------
In the Mortgage and in the Real Estate industry I have
positioned myself as a key contributor in helping people
realized their dreams.
Call us
 |  |  |  |  |  |  |  |  |
 |  |  |  |  |  |  |  |
 |  |  |  |  |
 | |  | |  | |  |
 |  |  |  |  |
WELCOME TO: KNOWLEDGEFINANCIAL.COM
