[Pedro Machado]

Pedro Machado

My attorney was not comfortable using a deed of trust to secure a lease option agreement. He was concerned about the fact the deed of trust is normally used to secure an indebtedness and I was not lending any money.

Has anyone faced a similar situation and how have you addressed it?

I showed him Jack’s book on writing and protecting transactions and that was not sufficient.

Thanks,
Pedro

[Greg Christiansen]

Greg Christiansen

Find another attorney.

[Anonymous]

Anonymous

I agree with Greg, find another attorney.

The attorney has a fiduciary responsibility to YOU and to protect YOUR interest. If he won’t do it, find someone who will protect your interest.

Just like a deed of trust acts as security for a lender, you need security for your option on the property.
Recording the option or a memorandum is not enough. Some title companies will look right over an option.

My guess is the attorney does not know how to do it so he says don’t do it.

NEXT – find a new one.

[John Long II]

John Long II

A deed of trust/mortgage is to secure the performance on the note. You can use it to secure any kind of contractual performance such as performing under the terms of an option.

I agree – new attorney!!

[Randy Grigg]

Randy Grigg

Why do you need an attorney? I just take my notorized deed of trust to secure my options directly to the recorder’s office. They always say we’ve never seen anything like this but have always recorded it If the deed of trust needs to be tweeked to fit their standards, they will tell you what to do…FOR FREE!!

I’ve done several over the years. All pure options with no lease. When the homeowner I made the deal with sells or refi’s, I get a notice from the title company wanting info. on my payoff demand. It works like a charm. I slleep like a baby at night knowing a deed of trust will get recognized and dealt with vs just a memorandum that might be missed or swept under the table.

[Pedro Machado]

Pedro Machado

Thanks to all who responded to my post.

Real Estate closings in our area are handled by closing attorneys. What I am looking for is a closing attorney who does not feel uncomfortable with this approach to secure an option.

I prefer to have a formal closing at an attorney’s office and have them prepare the paperwork, which I always review in advance of the closing.

I have contacted a few other closing attorneys in my area that were referred to me. I hope to find one soon.

Thanks,

Pedro

[Anonymous]

Anonymous

Pedro,

With just a lease/option, you don’t need a formal closing now.

You can perpare the lease, the option, and the deed of trust ( or mortgage) – then record them all if you wanted to.

[Pedro Machado]

Pedro Machado

Jackie,

In this particular deal (5-year lease/option), we had the closing attorney do the title search, prepare all the documents needed to transfer title (and to clear the seller’s title if we defaulted) and hold the documents in escrow. The sellers felt more comfortable with a formal closing.

Who do you use as the escrow agent to hold the deed when you do your own paperwork?

Thanks,

Pedro

[Daniel Matthews]

Daniel Matthews

Jackie – How do you get the properties to sell on a lease/option? I want to try some lease/options, but I was going to buy on a lease/option to get the properties so I could limit my risk and minimize the up front costs.
– dan

[Anonymous]

Anonymous

I don’t buy with lease options — never have. I have sold with a lease option in the past.

Most attorney’s will not hold a deed in escrow for more than a year — it will be considered STALE.