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Your Hosts: William Bronchick, J.D. & John Merchant, J.D.

William Bronchick is a nationally-known attorney, author, and speaker. He has been practicing law and investing in real estate since 1990 and has been involved in over 2,000 real estate transactions.

He has trained countless people all over the country to become financially successful.

Bill has served as President of the Colorado Association of Real Estate Investors since 1996. He is admitted to practice law before the bars of New York and Colorado.

He is the author of many excellent real estate investing and asset protection courses.

John Merchant is retired lawyer and long-time real estate investor. He's owned commercial real estate of every type in a number of states. He's a frequent speaker at real estate investment gatherings and contributes real estate investing articles to various real estate newsletters and publications.

His current real estate focus is the operation and expansion of a foreclosure trustee company and mobile home wholesaling.

John's book Use of IRA and Other Retirement Plans in Real Estate Investing was one of the first to address this real estate investment tool and has had many printings.

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Old 11-08-2001, 09:15 AM
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Default Legality of transaction - Posted by Chris
Posted by Chris on November 08, 2001 at 09:15:36:

I just ran into another "you can't do that, that's illegal issue" but I don't think this person is correct.

I have a SFR that I have leased out with a 5 year L-O with option to buy for $120,000. FMV right now is $108,000.
My lease payments I am collecting are about $100 over market rent.

An investor wants to buy my property, with full disclosure of the lease and option for $108,000. Fundamentally, the question then arises is it legal to sell a property if an option is already on the property if all parties are made fully aware (and sign appropriate documents at closing)? My thinking is that this is legal/ethical but this legal advisor is claiming that by giving the option, I have terminated my rights to dispose of the property.

Any thoughts?

Chris
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Old 11-08-2001, 08:35 PM
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Default Re: Legality of transaction - Posted by William Bronchick
Posted by William Bronchick on November 08, 2001 at 20:35:53:

Nonsense. You can sell the property, but, of course it is subject to the option. Thus, the optionee can still exercise his option at the price you and he agree to. If this happens, the proceeds go the the person you sold the house to.

Analogy: You have title to a property. You sell property on land contract. You sell your rights to receive payments under the land contract to third party. You also transfer the collateral for the debt, to wit: the deed.
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Old 11-09-2001, 08:33 AM
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Default Re: Legality of transaction - Posted by Chris
Posted by Chris on November 09, 2001 at 08:33:55:

Chris
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