Posted by Joel Ray (TX) on January 17, 2001 at 09:53:01:
I read through Bronchick’s L/O contracts posted at his site Legalwiz.com and they are Fantastic. I’m definitely looking into getting his L/O program. Thanks for your input Jim.
Joel Ray (TX)
Mandatory or Helpful L/O contract clauses - Posted by Joel Ray TX
Posted by Joel Ray TX on January 16, 2001 at 19:33:36:
Howdy folks,
To those of us new to the business of lease optioning could you please submit various L/O seller and t/b clauses that are recommended for inclusion in L/O contracts for protection purposes? Thanks in advance.
Joel Ray
Re: Mandatory or Helpful L/O contract clauses - Posted by Russ Sims
Posted by Russ Sims on January 16, 2001 at 23:45:57:
That’s a really good question, because I find that even the best L/O contracts leave obviouse things out.
The Legrand L/O contract gives my tenant/buyer the right to renew their lease for a second year… no where does it say that if tenant/buyer doesn’t want to renew for the second year, they must notify landlord. I got cought on this last month. I was expecting my December payment from T/B. When it didn’t come I called him. He said “Oh, our lease is up and we chose not to renew”…GRRRR! He might have said as much beforehand…my fault for assuming he didn’t want to forfiet his $3500 option fee. Anyway I was on the hook to the seller’s bank for the mortgage payment, which I made. I quickly remarketed the home and collected other $2500 down payment, so everything worked out fine…still it would have been nice to know that my T/B was planning to leave…
Neither the Legrand or Bronchick L/O forms calls for the seller to leave the property in “Clean, broom swept condition. Carpets shall be cleaned and all rubbish and personal belongings will be removed.” We have had sellers leave properties in a MESS!!! Now we make sure that they know we need the property to be move in ready when we take posession. Hope this helps.
Re: Mandatory or Helpful L/O contract clauses - Posted by JPiper
Posted by JPiper on January 16, 2001 at 22:35:11:
Why not just go to legalwiz.com and read the sample contracts?
JPiper
Also an incentive… - Posted by TRandle
Posted by TRandle on January 17, 2001 at 08:19:39:
I forgot to mention that I like having at least some funds to provide incentive for cleaning the place. If all funds are deemed non-refundable option consideration, there’s no reason for them to do anything. I generally reserve $300 for security deposit which will at least pay for cleaning if they bolt and leave a mess.
Re: Mandatory or Helpful L/O contract clauses - Posted by TRandle
Posted by TRandle on January 17, 2001 at 08:17:50:
Russ,
I’m not sure about the notice issue without checking, but if you’re using Bronchick’s stuff, my recollection is that he suggests a small security deposit to “legalize” the lease should you need to evict. In his security deposit agreement is the verbiage relating to leaving the property in good condition. That’s what I’ve done so far.
Re: Mandatory or Helpful L/O contract clauses - Posted by Jim IL
Posted by Jim IL on January 17, 2001 at 01:09:09:
Russ,
What agreements from Legrand are you using?
Are you using one agreement to L/O a home to a Tenant/Buyer?
If so, that may be the problem.
I use a Lease and a seperate Option agreement.
I put nothing in the lease about the option agreement.
I then put in the option agreement all the terms they must comply with in order to buy.
I make sure to include language about the option money NOT being refundable.
I include that the T/B’er must notify me in writing at least 60 days prior to the end of the corresponding lease whether or not they intend to exercise.
I place in the option agreement that the IF the corresponding lease is violated, as per me, then the option agreement is null and void.
My lease states that at the end of the term, the tenant must either vacate or negotiate with me to stay.
Also, that the home most be in clean swept condition, except for normal wear and tear, and will be inspected by me periodically throughout the lease term.
Pretty much, I took Legrand and made some changes to it to accomodate my needs.
Try that, it seems to work well for me, and my lawyer loved my ideas, and added a few.
Take care,
Jim IL
Re: Mandatory or Helpful L/O contract clauses - Posted by Russ Sims
Posted by Russ Sims on January 18, 2001 at 01:27:57:
Hi Tim:
I was referring more to the L/O agreement I make with with the sellers: I now include in the agreement that they must leave the property clean and I emphasize this when we sign…it’s made a significant difference . Take care!
Re: Mandatory or Helpful L/O contract clauses - Posted by Russ Sims
Posted by Russ Sims on January 18, 2001 at 01:20:53:
Hey Jim:
Actually, I mis-spoke: It’s the Bronchick lease contract that I had to modify for my t/bs (I use Legrand’s combined L/O contract with the seller). I like your 60 day notice requirement and will implement it on my next deal. Thanks!
Russ