My house is underwater and I lost my job . I know a construction guy who would like to rehab / upgrade / flip the house but a short sale will take months ( based on local RE history ) and tie up a lot of his credit for the process . I was thinking I could sell him ( say for $ 5000 ) the right - to - sell ( and manage ) my house ( creating a power of atty and a contract of conditions ) but I would still be the mortgage holder until he sold the house . He invests in the rehab and keeps the profits and I don't get my savings and my credit wiped out . Any legal pitfalls ( besides needing to write a good contract of course ) ? ? ?
BTW, I have an FHA 30yr Fixed mortgage that is 8 years old.
I think you must be careful with your plan, I would not advise this course of action if I would giving actual legal advice because you are opening the can of worms. While there might, I emphasized, might be a way to make this work where in CA, you are running the risk, and so is he, of the house still going into foreclosure, and his rights as would be foreclosed along with your at any foreclosure sale. One of the other issue you will face is the due on sale clause, not that you might actually be "selling" it to him, but you are trying to gain the same results by another name through contract. The issue here is the potential to fail. I think while your plan may be possible with good legal advice and drafting, it is not recommended.
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Real Estate Attorney
Your contractor will probably demand title to the property (or at least a portion of it) as consideration for his investment. You can make him a tenant in common with you, or you can transfer the property to an LLC or other holding company which you and the contractor run. A power of attorney is not advisable. Whichever option you choose (and there are others), you need a good contract.