I'll take the lease, leave the option - Posted by Watbob(MA)


#1

Posted by Bronchick on November 06, 1998 at 13:06:10:

You are correct. As for retail books under $30, you get what you pay for!


#2

I’ll take the lease, leave the option - Posted by Watbob(MA)

Posted by Watbob(MA) on November 06, 1998 at 09:51:05:

A question for the l/0 experts:

What if a tenant decides during their l/o period, that they no longer care about the option and decide to only pay the lease portion?

For example: Following the great advice of many on this site, you draw up to separate contracts, one for the lease and one for the option, each covering one year. Two months into the deal the tenant decides they aren’t interested in buying the property (or care about their option consideration) and decide to only make payments on the lease portion. As I understand it, they haven’t broken any terms of the agreement, but I would be stuck with at or below market rent (because of the credits) for the remainder of the lease.
Any thoughts? Would it be safer to due a month to month (or quarterly) lease?
Thanks!


#3

Re: I’ll take the lease, leave the option - Posted by Bronchick

Posted by Bronchick on November 06, 1998 at 10:20:48:

I have had this happen several times. The rent is not below market, it is at or ABOVE market. They get a part of the rent applied towards purchase IF they buy (I refrain from the word “credit” because it implies they are entitled to something back).

If they decide they don’t want to buy, fine, just keep paying the rent at the stated price (high). If they argue about the rental price at that point, let them out of the lease. You still get to keep what you collected and find a new lease/option tenant who gives you more option money.


#4

Bill, what about the “discounted rent” - Posted by Joe(IN)

Posted by Joe(IN) on November 06, 1998 at 12:09:49:

Bill,
I’m studying your course right now, and I’ve been wondering about this. I’m thinking that in court all I’m showing up with is the lease, leaving the option at home (so to speak). So, the lease shows this high dollar rent leaving the option part out of it. Good so far!
Then someone points out that the lease says “in exchange for a DISCOUNTED rent, tenant is responsible for repairs”.
It seems like I have a problem with the judge at that point if he has any idea what the rent value is.


#5

Re: I’ll take the lease, leave the option - Posted by Watbob(MA)

Posted by Watbob(MA) on November 06, 1998 at 10:51:18:

Thanks for the response.
If I understand correctly, the lease would only mention “rent”, that would be above market as you pointed out, and the option would state what portion of the rent would be applied to the purchase IF the tenant exercised their option. Therefore the tenant, regardless of whether or not they care about the option, would have to continue paying the stated amount to not break the terms of the lease. Correct?

The only reason I became confused about this is because of something an author had stated in a book I was reading in Barnes and Noble last night. I guess I should just keep following the advice I find here at CREOL!
Thanks!


#6

Explanation - Posted by Bronchick

Posted by Bronchick on November 06, 1998 at 13:04:53:

It is discounted. It could have been higher. I put that language in there because in some states (like CA), a “tenant does all the repairs” clause is not enforceable unless there is some negotiated reduction in rent. If the current rent you are asking for is $700 per month, you tell the prosective tenants that you usually ask for $750, but this “discount” is for them doing minor repairs. This has nothing to do with the “rent credit” for buying the property.