In beginning our discussion of the various legal instruments used in assembling funds for the purchase of rights in land and improvements in a real estate market, it will be well to note that, in the case of a fee, the estate purchased is in this perpetuity. This affects the price, which is customarily paid in advance for the perpetual term, and contrasts sharply with transactions involving short-term estates, such as apartment or office leases. It is also the reason why most real estate financing problems arise out of transactions in real estate market involving fees.
It is also the reason why most real estate financing problems arise out of transactions in aestate market involving fees.
The difficulties accompanying payment in advance are multiplied by the infinite term of the rights conveyed and by the fact that funds for advance payment cannot be accumulated from accruing benefits.
If the purchaser of a fee cannot provide the price from his own resources, he has to borrow and pledge the rights he acquires as security for the debt assumed.
Thus, in effect, he is enabled to place himself in a position comparable to that of the tenant on a short-term lease, at least so far as paying for his rights out of funds accruing during their terms is concerned in a Real Estate market.
Similarly the chances of fluctuations of major size in the price of the services rendered by land and improvements increase with the length of the term of an agreement. The result is that, when funds are borrowed, the lender will ordinarily require some form of security to guarantee future payments in the market.
The methods, instruments, and practices used in acquiring title to land and improvements are simplest when all of the purchase price can be provided at the time of transfer in cash or its equivalent from the purchaser's resources, that is, with equity funds.
In a similar approach, whilst the buyer's finance resources in a real estate market are inadequate or in a manner that he believes it not suggested concentrating. The expression "cash or its equivalent" is used to indicate all forms of wealth that the seller is willing to accept as a part of the deliberation. On the whole, transfers are processed in which little or no real cash or liquid securities are in use.
Lisa Cooper is an expert realtor and deals in Laguna Niguel Real Estate, Dana Point Real Estate, San Juan Capistrano Real Estate, and Orange County Real Estate.
Article Source: http://EzineArticles.com/?expert=Lisa_M_Cooper
0 comments:
Post a Comment