[Gary Covert]

Gary Covert

I was watching Tilney’s video on sandwich/master leasing. In that he recommends recording a mortgage or deed of trust to secure the interest in the lease.
Has anyone done this?
For what value?
How did you explain to the homeowner/lessor?

[Greg Christiansen]

Greg Christiansen

Gary,
I have talked to David about this. I believe if you check the conference call recordings, he discusses this at the end of one of the phonecalls. It is a substantial amount of money–the monthly value of the lease (say $900) times 12 (months) times the number of years you have the leasehold for (say 5 years). So you would secure it with $900*12*5 = $54000. I have yet to do it myself. According to him, he simply tells them that this is how we do business and we need to protect ourselves. He said he has never gotten flack over it. Find the phonecall (around end of Sept/early Oct of this year) for more information.

[DON WEDE]

DON WEDE

Gary:

I do not put a monetary amount in the mortgage. A mortgage is a security instrument to secure almost any kind of promise. My mortgage outlines what will happen if the optionor defults on the terms of the Option Agreement (Contract).

Don Wede