Re: Responsibility of T/B for repairs - Posted by JohnBoy
Posted by JohnBoy on October 21, 2000 at 19:48:04:
First of all, the $500 per year clause in Bronchick’s contract is the contract that YOU would use as the BUYER doing a L/O deal that YOU would be buying from a seller and sub-lease optioning to YOUR tenant/buyer.
The second set of contracts that Bronchick uses would be for YOUR tenant/buyer with you being the Landlord/Seller. That has two separate contracts to use. One as the lease agreement and one as just an option agreement.
The money your tenant puts up is NOT a deposit in any way. It’s for “Consideration” of BUYING the OPTION to buy the property at a later date at a predetermined price IF the tenant elects to exercise their option.
Dealing with the repair issue, YOUR tenant/buyer would be responsible for ALL repairs for ANY AMOUNT that they might cost. However, in some cases you may have to step in and help pay for these repairs if your tenant/buyer doesn’t have the money to pay for them. You would end up doing this simply to protect your investment on the property. You would work something out with the tenant/buyer for them to pay you back somehow. That could be by having them pay you extra each month, add the cost to the sales price, or whatever works for you.
You can have a clause in your contract that allows you as the landlord to be able to inspect the property every few months. If upon your inspection of the property you found anything needing repairs you would have the right to have those taking care of and the tenant/buyer would be required to pay you any cost involved since they have breached their agreement by not properly maintaining the property. Otherwise they would lose their option, option consideration paid and could be evicted by you for breach of contract.
You should also get enough option consideration up front to give the tenant/buyer more incentive to properly maintain the property and follow through with exercising the option. Otherwise they stand to lose a lot more if they decide to walk away. Plus you will have a decent amount of THEIR money from the non-refundable option consideration to pay for any repairs that may be necessary.
The LESS you accept as non-refundable option consideration, the MORE you risk in absorbing a loss because the tenant/buyer has a lot less to lose.