a Lease-to-Buy/Own Questions .... Need Advice Please

[Michael Dunn]

So I'm currently in a situation with a Property that I've never been in before, and need some help please, in how I should go about it . proceed , as well as a Refinance Question 

The Scenario:

So i talked to a Title Company (a Lawyer ) , and he said that I could do a Lease-to Buy/Own 

It would take 1 and a half years  ( TN/MS State Probate Law ) , before I could " Officialy " Pay for the Property and thus own it 

My Lawyer said that we could Set it up this way ( as Long as the Heir of the Property agrees to it ) ......... I could go ahead and Start fixing the place up ( Renovating it ) ...... It needs a lot done to it. 

Once I have it rent Ready , I could go ahead and start renting it out to someone 

Then come the Year and a Half mark , I would pay her the Amount that is agreed upon in the Contract we both sign 

My Questions are :

1. If I use my Own Cash to repair and fix the Place up ...... during the 1 and a half year Probate period ,....... Will I be able to Refinance the Property based on it's ARV , so that I can get my Cash " Back " ?

2. What ( if anything ) to I need to make sure is written in the Contract, for when she ( the Heir ) and I sign the Lease-to-Buy Contract ?

3. Once the Contract is signed / dated and Notarized ....... No one can Back out on the Contract correct ?

4. Even though the States Law says that 1 and a half years is the Probate time period ....... Can I purchase the house from her BEFORE the 1 and a half years is up ?

Thank you for any and all help ..... Title Searches, using a Lawyer to draw up a contract and Probate is all new to me . Just want to make sure I know all of my Facts before I have the Lawyer draw up the Contract next week 

Thanks so much 

[Christopher Phillips]

Let me see if I understand this correctly...

You want to buy a house that is in probate, which can take a long time. So you want to lease it for now, and then buy it when the probate is over. Correct?

If that's right, you are only leasing it. So, there is no financing now. So you can't refinance something that you don't own and pull your rehab money out.

That brings up the other question. Lease to own is really lease with an option to buy. So, you probably don't want to sink money into a house you don't own in the event that you don't actually buy it when probate is over (things happen). Can you rent it out while you leasing it? Depends on the agreement. Since you don't own it, that would be subletting and would depend on the agreement.

At the end of the probate and you buy the house, your loan will be based on the appraised value of the home. You would still need to apply and qualify for the loan and put money down. If you're occupying it you could do 3.5% down going FHA. If you're renting it, it would be conventional loan since you won't be occupying it. But they will only lend to you based on the agreed upon purchase price. The loan is always based on the lower value of sales price or appraisal. You can do a HELOC if you have equity you need to tap, but that's based on your ability to borrow.

Have you been pre approved for the purchase price?

Can they back out of the contract? It's possible to find some language in the agreement that allows them to try and break the option, but it won't necessarily be easy to do.