[WSBARP] Reversionary Interest in Lieu of Foreclosure

[David Faber]

Thank you all. You've pointed to the same thing my gut and my vague memory
were telling me regarding reversionary interests. I appreciate your
assistance!

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

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On Wed, Nov 13, 2019 at 11:43 AM Bryce Dille <Bryce at dillelaw.com> wrote:

> You can’t have reversionary clause in deed in the event of default since
> that eliminates the “equity of redemption” You could also take as
> additional security a second deed of trust on his other property
>
>
>
> Bryce H. Dille | Attorney at Law
>
> Dille Law, PLLC
>
> P: 360-350-0270 | F: 844-210-4503
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>
> Olympia, Washington 98502
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> www.dillelaw.com
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> *From:* wsbarp-bounces at lists.wsbarppt.com <
> wsbarp-bounces at lists.wsbarppt.com> *On Behalf Of *David Faber
> *Sent:* Wednesday, November 13, 2019 10:17 AM
> *To:* wsbarp <wsbarp at lists.wsbarppt.com>
> *Subject:* [WSBARP] Reversionary Interest in Lieu of Foreclosure
>
>
>
> List:
>
>
>
> I'm working with a client to negotiate a somewhat unique purchase
> agreement. C owns a lot with a partially-built house on it and has found a
> buyer who wants to complete the house. B lacks sufficient liquidity to buy
> the property outright and instead needs C to carry the note during the
> final buildout with a balloon payment at 1 year, at which point B will
> either get a bank loan on the completed house to pay off the balance of the
> note or sell his other house to make the balloon payment. My concern is
> that this presents a significant risk to C in that a trustee's sale is
> probably not going to generate sufficient funds to pay off the full balance
> of the note. Instead, C is interested in retaining a reversionary interest
> in case the balloon payment deadline is missed. I have been able to find
> nothing that expressly forebids this but I have a nagging sense in the back
> of my mind that this kind of loan structure might violate one or two
> consumer protection laws that I cannot put my finger on.
>
>
>
> Has anyone dealt with a seller-carried mortgage transaction that included
> a reversionary clause on the deed who would be willing to chat with me
> about it?
>
>
>
> Using a REK is not ideal because of some additional complications.
>
>
>
> Best,
>
> David J. Faber
>
> Faber Feinson PLLC
>
> 210 Polk Street, Suite 1
>
> Port Townsend, WA 98368
> (360) 379-4110
>
>
>
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