Almost Ready - Lease/Option Question from a Newbie - Posted by Tony_PA


#1

Posted by hk CA on November 02, 1998 at 11:50:27:

You are correct, of course, but let me mention why I now always put those few words in all of my contracts. A few years ago I sold a L/O without the phrase, “and/or his assigns.” When the original seller found out, he got irrate and tried to sue me. Although he had no grounds, I spent many hours and many dollars to defend myself. It created doubt and apprehension with the person I assigned the contract to, as well. The seller eventually realized he was wrong and dropped the whole thing. But it was not without time and money being wasted, not to mention ill feelings. I find it better to cover my *ss from the get-go and concentrate on making money, not correcting problems. When sellers ask about the clause, I just say that I may want to transfer it into a trust for tax planning purposes or possibly to a family member at some time in the future. I’ve never had an objection to that.

People often feel like they’ve been “swindled” when they find you have done something they didn’t expect and they think you profited from their ignorance.


#2

Almost Ready - Lease/Option Question from a Newbie - Posted by Tony_PA

Posted by Tony_PA on October 30, 1998 at 22:56:51:

Well, I am about to get start making my first calls and want to start with lease/options…probably because I have done the most reading on this subject. Anyway, I even have a tenant lined up for my first contract of a SFH. Now for the question/problem. The tenant is a family member. Can anyone speak from experience about renting out to a family member. It has nothing to do with trust or anything like that, but… Are there areas of concern? The family need has a need that I have the ability to fullfill. It seems like a great starting point.

Also, can I contract the lease/option with the seller for the possibility to sell to the new tenants? Or is that what the option is all about…meanin, I can “sell” my option. I already know the answer is yes because that’s what creative financing is all about…right? This is the way I would like to handle my first deal. Please let me know what you think or recommend from your own expereince.

Thanks!


#3

Family Feud - Posted by hk CA

Posted by hk CA on October 31, 1998 at 20:22:44:

Good advice from Rob FL. Stay away from deals with friends and relatives!

Your lease option should always include the phrase “and/or his assigns” after your name. You can then transfer the option to someone else.


#4

be careful - Posted by Rob FL

Posted by Rob FL on October 31, 1998 at 16:32:31:

Be very careful renting to friends and relatives.

Here are some scenarios.

You rent a house to your brother. Rent is $500, your mtg payment is $400. 6 months into the lease he loses his job or get in a car wreck or catches pneumonia for 2 months. He can’t work and he can’t pay you. What are you going to do???

Will you charge him late fees? Will you force him to move out? Will you sue/evict him if he won’t/can’t move?

What happens if he wants to have his girlfriend move in? Or wants to buy 3 great dane’s? Or has a party and trashes the place? Are you willing to enforce the lease against him?

If you do sue him? What will your parents think?

Renting to family and friends is very dangerous. I make it a point to never be friends with my tenants. That doesn’t mean I am not friendly and courteous to them. But it does mean that I don’t watch football at their house on the weekends. I don’t invite them out to dinner. I treat them like an acquaintence but not a friend.


#5

Familiarity breeds Contempt - Posted by Mr Donald (NORVA)

Posted by Mr Donald (NORVA) on October 31, 1998 at 07:50:25:

Familiarity breeds Contempt. That having been said, you’re better off finding someone in your neck of the woods whom you’re not remotely related to. Makes it easier to manage the property and the tenant too. Also makes it easier to evict when the time comes.


#6

Re: Family Feud - Posted by John OH

Posted by John OH on November 02, 1998 at 01:52:51:

ANY contract that does not specifically say that the contract is not assignable IS assignable. There is no reason to even mention assignability unless you feel a moral need to discuss the possibility.