@Joe GoreI see what you are getting at but what's to prevent him from using the hard money lender?

I believe most mortgages have provisions that prevent calling when a property changes ownership due to death.

I see these on Title reports as a Civil Engineer for commercial properties.It's just saying that if you default, in order to prevent you from skimming the rent and not paying the loan they are authorized to collect the rents in the mean time.

It's signed by both parties and prevents the need to rewrite the whole contract for this type of change in terms.Your seller friend has to explain the oversight of this item that is very significant to the buyer.

It can't prevent mechanics liens and lots of other types of liens that can pop up without the borrower actually taking out a second mortgage.My borrower had made a secret side deal with the contractor to give him a piece of the profits in return for not having to pay the rehab costs upfront.So the contractor was essentially a JV partner with $30K invested and I didn't know it until it came time to sell the house (at a loss to the investor) and the contractor filed a document that (while not a legal lien), clouded title enough to quash the sale.It also prevented me from a clean deed in lieu and I had to foreclose to wipe him out.The good part about the whole thing was the borrower was cooperative with me because he wanted to screw the contractor.

We aren't worried about that because we do our foreclosures correctly and challenges fall short, but it does prevent us from getting title insurance to sell the property.

Umbrella insurance may be a cost effective solutionThere is a laundry list of low cost steps you can take for preventative measures and you can definitely get sucked into doing the "entity shuffle"like lots of fear mongering "asset protection" gurus and attorneys that will prey upon you and have you believe you need an LLC per property, a Nevada Corp, a series LLC and an offshore trust etc etc.

One ploy the tax rules sought to prevent was the passing of property through a decedent to attempt to inflate basis under the above rules.

And no state law anywhere that I know of will prevent you from doing this.

We work as a team to assist them in surmounting the hurdle that prevents them for purchasing a home.