The Lighthouse for Recovery Ministries - A Beacon of Light for the Soul in Need!
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BUYER BEWARE! ALABAMA'S ARCHAIC LAWS PERTAINING TO REAL ESTATE AND HOME OWNERSHIP IN REGARDS TO LEASE WITH OPTION TO BUY CAN LAND YOU IN COURT

Lease-option agreements are generally utilized in residential real estate acquisition when a home buyer would like to purchase a home, but needs to repair their credit rating in order to secure a promissory note and mortgage. The lease-option agreement allows a buyer to lease a property for a set period of time—typically between 1-3 years—with the option to buy the property at a contractual future date.

The negotiated option is typically a percentage of the price for example, one to five percent, and is credited, along with the rents and a rent premium, to the purchase price if the lessee buys the property. If the option to buy is not exercised, the buyer will lose the option fee and rent premium.

During a two year legal battle within the state of Alabama Courts here in Jefferson County concerning  my home, I have been introduced to the fact that Alabama’s archaic laws include not honoring or having legislation (after contacting my state’s senators and reps) dealing with the “lease with option to purchase with bond title”, unlike numerous states that abide by these legal binding contracts. The judge of record has been so supportive but he has to go by the existing laws.

Albeit, my current situation is one that is very convoluted, it is still a warning to those who have or want to enter into (merger into subsequent contract) a “lease with option to purchase” in the state of Alabama.

I leased my home in 2011. In 2012, the owners and I entered into a “lease with option to purchase with bond title” as a detailed Merger into Subsequent Contract in which my landlord and their attorney signed off on the contract.  In January of 2014, I exercised my option to buy “as is” since my landlords/owners refused to make repairs they were obligated to the house under Alabama Landlord and Tenant Law. City of Birmingham could have condemned the property at that time due to the $45,000.00 necessary to repair this home built in the 1930’s.

Under the purchase, I assumed the cost of repairs but the owners bore the all costs for closing under our contract, which included paying off the existing mortgage and transferring the deed and/or title to me.  But, here’s the clincher: instead of paying off the mortgage under the contract, the owners fraudulently included this “sold” property in their bankruptcy proceedings in late 2014. 

Since this property was to be an investment property for the Lighthouse (in case I moved, I would convert the property into one of our transitional housing programs), I have had three full grants for purchase and restoration for the past four years in escrow. 

I filed or “staked” my claim as a creditor and/or debtor with the U.S. Federal Bankruptcy Court here in Birmingham, Al  in August 2014.  I was told to wait until final adjudication because the owners could at any time, remove the property for consideration.

Therefore on June 2014, I filed my first complaint for Bankruptcy Fraud against the owners.  But the battle had just begun.  Fannie Mae paid $19,237.00 for the property in foreclosure.  So my journey of fighting Fannie Mae to re-purchase my home, begun in July 2015 and still continues in the federal court and agency realms to this day.

If any have followed my previous posts, you know that the community in which I live and have worked for the past five years, Woodlawn, is predominantly black and Hispanic with only 7% white population.  It is a community of homelessness, prostitution, drug use and drug dealers, extensive number of abandoned houses and condemned properties (the house next door to me was condemned earlier this year) and theft and vagrancy.  This area has numerous  “for sale” signs that have been up for a couple of years and real estate listings that stay on the market for years.

Fannie Mae has refused to negotiate, even under their own rules and regulations, to sell me the home that I purchased originally from the owners in 2012 and the asking price is only $19,000.00. Their response through their local attorneys is : that the numbers don’t add up! Crock!  They are just mad that I decided to fight their lawsuit. Evidently any one else can buy my house but me which is just morally and ethically wrong!

During this year long battle to attempt to defeat the “ejectment “ proceedings, Fannie Mae, through their representative law firm and realtor,  has refused to provide me with an asking price, although the attorney in court stated that he would get me a price before April 3, 2016, but they now have listed the house on the internet at $19,287.00 (with photos taking of the interior and exterior of the house from 8 years ago, not as it as this moment with needed repairs of $85,000.00).

Because of the extent of the needed repairs from 2011 to now, the investment value of the home (I have had all the inspections and insurance inspections completed) is in the negative value range and is really not going to be sold at that price in this neighborhood once a prospective buyer reviews the actual property.  It had been on the market for 8 years prior to my purchase with no buyers except myself.

I will continue to fight the battle in the federal courts and with federal agencies even though under state law, I am being forced to move my nonprofits offices,  family (which includes dogs), and personal belongings within two weeks which is an impossible tasks given trying to find a house that will allows animals is almost impossible in this city.

The moral of the story is review your state’s “lease to option to purchase” laws prior to entering into a contract with your landlord, or you might just wind up with “criminal thinking”  landlords like I had.  Our state legislation needs to address this issue and revise current laws, particularly in this economic environment for the housing industry. 

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