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Lease Option without Foreclosure Risk

In many states including California, if you lease a property with option to purchase, it conveys equitable title in real estate to the lessee/optionee.

It there is default, lessor’s remedy is go to court with judicial foreclosure. If the lease/option is secured with a deed of trust and rights of foreclosure, then it’s non-judicial. What if you’d prefer to completely avoid either mess?

First, place the property into a common law trust

Second, have the trustee lease the property to tenants

Third, option the beneficial interest on installment.

This avoids a transfer of equitable interest in real property. In default, only landlord/tenant law applies to real estate. Since the beneficial interest is personal property, it is repossessed per national UCC (uniform commercial code).

http://en.wikipedia.org/wiki/Uniform_Commercial_Code