Posted by JohnWe (NoCA) on January 21, 2000 at 09:46:22:
What breaks this deal is the debt (isn’t that always the case!). With $295K in underlying debt, I’m guessing her holding costs are more than $2K. That’s a lot of wood to chop if something goes south (And in this deal, you’re just aking for Murphy to step in). It might be worth it if the FMV was more, but here’s it’s not. That’s why I suggested the wrap, because that’s the only way I can think of getting 10% over FMV, while getting a nice chunk of change down.
In the earlier example, keeping their $15K is not fair. You would give it back, but the work they already did is their problem. The option consideration is the $15K plus the fixup to your standards. The lease doesn’t start until the work is done to your satisfaction (that’s why you don’t give him the keys). You can’t be a jerk here either. If the guy does a decent job, but you don’t like the shade of paint he used, you can’t say take a hike – thanks for the work. What you’re trying to protect yourself from is a contractor that says he’s going to fix the place up, then sits on his butt for 6 months doing nothing.
If he doesn’t do the work right, you’ll both know it, and if he still tries to backout, remind him of his signed contract and that he would lose in court, and just cost him unnecessary attorney fees. If he still wants to go to court, try to settle first for a reasonable amount (avoid court as much as possible). If you can’t settle, you’ll have your day in court, and you should win.