Lease Option question - Posted by michael

Posted by JPiper on January 23, 2000 at 11:04:32:


My take on this is that ?equity? that may have built up in the property, along with option consideration are in all probability marital assets. As such, you and the husband can?t unilaterally decide to write the wife out of the picture.

Offsetting this the wife has an existing liability as well under the lease. That doesn?t just go away either. And something to think about: The tenant says he can pay rent on his own?.but you should be evaluating that for yourself based on his application, or for that matter, based on a new application. Did the wife have income? If you had to go after delinquent rent, would this be easier if the wife was still on the lease?

Understand this?.divorce is one of those things that could go smoothly, but rarely does. One of the things that is TYPICAL with a divorce is some type of credit issue. While I don?t know these people, I think I can safely say that what I would be more worried about right now than whether they?re going to exercise an option is whether they pay the rent at all. Keep in mind, credit issues are common.

Let?s talk about something else. There?s also a question of whether this guy can get a loan without his wife (if many states the lender is going to require the wife?s involvement in terms of signed the deed of trust/mortgage, at a minimum). Further, once he acquires the property by deed, it may well become a marital asset. What do you suppose the likelihood of an exercise is when the husband finds this one out?

Then there?s the issue of whether the wife comes back. They do you know?even after domestic violence. In fact that?s pretty common too. Given that, do you want the wife living in the property after you just took her off the lease?

Given some of the above, this situation doesn?t look quite so straightforward does it? Lots of twists and turns and possibilities. So if I were you, here?s what I would do. First, I would inform the husband that the agreements that you have are legal agreements?and the two of you can?t ?just do? anything. That whatever you do will have to be done legally.

I would take a new application on this guy?and evaluate whether I want him alone on my lease. If that passed my approval, I would talk to my attorney about some of the above legal issues as they may apply in your state. You can undoubtedly amend your real estate contract WITH the wife?s signature agreeing to her removal from the contract. If there is an option I am sure she can release her interest, and I?m sure she can release her possible claim to any interest in the option consideration or rent credits. Perhaps she can release those in return for removing her liability under the lease. Whether ANY of this truly benefits this guy is another question?.because even after all of the releases, etc he is still married at this moment.

Another possibility is to tell the guy to get a divorce?and when he does?you?ll enter into a new deal with him?assuming he keeps the rent paid on a timely basis in the interim. Let the divorce court deal with the issues of the option. Bottom line though is that when the option expires there is nothing left?.and at that point you can simply wait for the completion of the divorce?.and then enter into a new deal with the husband.

Remember?this is a combustible situation? with it in a legal and fair manner?.and don?t get into one camp or the other.


Lease Option question - Posted by michael

Posted by michael on January 22, 2000 at 22:00:00:

I just returned from one of my rental properties. I lease optioned this property for $1500 option consideration and $795 rent with $200 going towards rent credit. I arrived at the house to find that the tenant’s wife had just left him. Apparently there is a history of domestic violence and the police have been involved. The tenant in wants to stay and not walk away from the equity he has build up. However, the wife’s name is on the lease two. I have a separate rental agreement as well as a REPC contract filled out. There is now a no contact order between the two of them and I don’t know how to reach her or even if I should. Tenant says he can pay rent on his own and wants wife off the lease. What are the legal raminfications of a split like this and how should I procede?