Leaseback Contract Clause Protection

[Webb Sledge]

I understand leasebacks can be a great thing for both a struggling homeowner and for us as real estate investors, but if the homeowner files for bankruptcy and gets audited, it can mean a huge headache if not a huge loss of money for the investor.

So, is there any sort of clause you all are using to help protect yourselves from this sort of disaster? Obviously, it will not be construed as legal advice, blah blah blah... but a brief rundown would be appreciated.

[Jon Holdman]

Its easy. Don't do purchase/leasebacks. You're putting yourself at great risk. The homeowner that's grateful for your help when they need its will turn on you like a cornered animal as soon as something goes wrong. If you're buying a preforeclosure property, the current owner leaves. End of story.