But They Really Wanted To Stay

But They Really Want To Stay!
by Barney Zick -


I get this all the time . . . "I have a super deal. The person is behind on payments and they will give me their equity if I will bring the loan current, but they really want to stay in the property. Tell me how to do this."

Well, old pockets are full of money. I will give the warning one more time.

My rule is to NEVER let them stay in the property. Never. Why? There are many reasons. Before you decide to go ahead, and before I tell you the exception to the rules, read the following reasons:

You take a very real risk that the former home owner will later claim that he or she did not understand. They thought the money was a loan or, worse yet, a gift. When they take it to court, the judge will call them "stupid". He will then tell them they won their case because the judge will not take the chance that they really believed they would get to keep their home! (No Judge wants to kick a home owner out due to something an investor did!) Many states have homestead laws that basically say, no matter what the homeowner does, they still have lots of right. Be careful. Many states have laws concerning buying from people in foreclosure. If you leave them in the property, you double the chances of confusing what you were doing and running afoul of one of those laws. In both cases, you are better off if you get them out of the property.

If you stop to think about it, you are leaving someone in the property that has proven that they don't pay for their housing. Dumb move.

How are you going to let them stay? Are you going to have them sign a lease? Kicking the person out that use to own the place gets complicated.
Are you going to let them cancel your purchase by buying you out? That will most likely violate usury laws. It's easy for an owner to say that you hid the fact, that you were making a loan, by a lot of paperwork. The courts buy that quickly.

So, what do you do? Get them out of the house, that's what. No money, no nothing, until they are out of the house. Oh . . . I give them $10, and I have a document I require them to sign that protects me, but only $10. Just get them out of the house first--even if you must rent them another of your properties to prove that they really do have a sale, and not a loan, or a gift or whatever.


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Copyright of Robert G. Allen
Author of Multiple Streams of Income
http://www.robertgallen.com

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