Eviction vs. Foreclosure

[DavidMacDonald]

Hi Everyone!

Just wondering if it takes longer to foreclose on a property that you`ve sold w/ owner financing than to evict if sold on a lease option. Fortunately, I`ve never had to do either one, but I want to be aware of how long it takes (and which one cost`s more in legal fees) so I can prepare should the unthinkable happen.

Thanks very much!

 

[antaynguy]

Hi David,

I am not an expert, but from what I understand, it is a lot easier to evict a lease purchase tenant then to go through the foreclosure process.

For a lease purchase, it should only be the same process of evicting the tenant for non-payment.

For foreclosure process, it could be a long and costly process depending if the resident has equity. This process can drag on for 6 months.

Cheers!

Antay

 

[JohnSoucie]

QUOTE (antay @ Jan 7 2010, 01:01 PM) Hi David,

I am not an expert, but from what I understand, it is a lot easier to evict a lease purchase tenant then to go through the foreclosure process.

For a lease purchase, it should only be the same process of evicting the tenant for non-payment.

For foreclosure process, it could be a long and costly process depending if the resident has equity. This process can drag on for 6 months.

Cheers!

Antay

This is for Alberta....does anybody have or can do a real number comparison for Ontario considering the Power of Sale foreclosure system AND the unfriendly Ontario LTB? Maybe Ontario is one of those situations where it`s 6 of one, half dozen of the other???

Ron did say you need to know the facts for your area and that would possibly guide you away from one or the other depending on the length of time to ultimately recover the house.

Thanks;
John Soucie

 

[tonypeters]

David, both John and Antay are correct!It can take a LOT longer to foreclose than evict a Tenant! Since I started utilizing the "Lease To Own" strategy almost seven years ago, I have come full circle. I started off by utilizing the "Residential Lease with Option to Purchase" strategy, then I switched to utilizing "Mortgage Wraps" (otherwise know as blanket mortgages in Canada). I then turned back to utilizing "Residential Lease with Option to Purchase" type contracts.

WHY? Because it once took me two years to foreclose on a property because the legal system is set up in such a way that it "protects" the equity of the home owner. And during that time I did not receive any mortgage payments. That hurt!

The key here is to ensure you structure your (Lease Option) contracts correctly, if not, a Judge may very well view your "Lease with Option to Purchase" contract as a glorified "Agreement For Sale". In this case, your request to evict the Tenant under the "Landlord and Tenant Act" will most likely be declined and referred to the foreclosure courts. If you have not already done so, you need to attend one of Barry McGuire`s "Deal Ready Documents" workshops, as he covers areas like this very well!

With all of this said, you will ONLY run into a problem like this if and when you have a disconnect with a Tenant/Buyer.

I cannot stress the importance of education! As I always say, you may very well have great intentions, but you can easily set yourself, as well as others up for failure if you do not take the time to cleary understand the "legal" aspect of the strategies you are implementing. I know the "legal" aspect of Creative Real Estate Investing can be a somewhat "boring" and "dry" subject, but it`s one area of the business you should NOT take any shortcuts!

Hope this helps answer your question?


QUOTE (DavidMacDonald @ Jan 6 2010, 08:52 PM) Hi Everyone!

Just wondering if it takes longer to foreclose on a property that you`ve sold w/ owner financing than to evict if sold on a lease option. Fortunately, I`ve never had to do either one, but I want to be aware of how long it takes (and which one cost`s more in legal fees) so I can prepare should the unthinkable happen.

Thanks very much!

 

[DavidMacDonald]

Thanks for the valuable information everyone!

What you said in your post, Tony, was what I figured. I did take Mr. McGuire`s "Deal Ready Documents" couse following the Ron LeGrand event. It was money WELL spent and I highly recommend it to everyone! Any yes, you`re right, I do need to brush up on my legal knowledge; I`ll be re-reading through the documents again before my next transaction. Sometimes I find it difficult to determine the "what-if" situations when reading through the forms, but I`m sure that understanding will come with time.

I can see how being up-front and honest to your tenant/buyers is so important from the very beginning. Tell it exactly like it is and the chances of any defaults in the future will hopefully will be minimal as you`ll both be on the same page.

Thanks again!

 

[markl]

Just an add on to the conversation if your tenant has had their lawyer review the contracts (They have gotten independent Legal Advice) this weighs greatly in your corner if you are involved with a tenant claiming ownership rights in the property.

ILA is very important for all parties. If they walk from the deal because of whatever the lawyer said they were going to be a hassle to deal with anyways and you have just used another great filtering system.

 

[DavidMacDonald]

That`s great advice...thanks Mark! You can never have too much CYA in this business