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lease to own

chargerharry

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Aug 30, 2007
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130
Hi All
I have a couple of quick questions for lease to own. I have someone who is interested on one of my houses as a lease to own. What I was considering doing is giving him a 1 year lease. I would self manage with a 1 year lease in place and offer him 10% of the rent as a bank account against future purchase.

Do I have to have 2 seperate contracts in place? IE a rental lease and a lease to own contract stating price and terms? I believe I heard Barry mention that you had to have to do it this way or you may run afoul of Landlord/Tenant.

Any other suggestions?

Thanks
Harry
 

WadeFenner

Inspired Forum Member
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Nov 7, 2007
Messages
148
QUOTE (chargerharry @ Nov 16 2009, 11:48 AM) Hi All
I have a couple of quick questions for lease to own. I have someone who is interested on one of my houses as a lease to own. What I was considering doing is giving him a 1 year lease. I would self manage with a 1 year lease in place and offer him 10% of the rent as a bank account against future purchase.

Do I have to have 2 seperate contracts in place? IE a rental lease and a lease to own contract stating price and terms? I believe I heard Barry mention that you had to have to do it this way or you may run afoul of Landlord/Tenant.

Any other suggestions?

Thanks
Harry


Hi Harry,

Call me on this if you like.

Caution on the contract thing: Yes two contracts the first being the lease, a standard Residential Tenancy Agreement will do fine. The second is a "Option to Purchase Agreement".

vs a lease & a lease to own.

Its not really the Landlord & Tenant Act you could run into problems with its the court if there is ever a landlord-tenant dispute. If the option to purchase portion of the contract is in your lease and the "tenant/buyer" decides to not exercise and they want all their money back and it winds up in court and the Master In Chambers/Judge doesn`t like you or your agreement they may say it was a heavy handed security deposit and make you repay eveything back to the tenant/buyer.

Best to keep the contracts seperate that way its either a landlord-tenant issue or regular court case.

Have a look at a few lawyer provided option contracts and a few investor option contracts and pull some of the best bits from each.

Good Luck,
 

markl

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Oct 1, 2007
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1,102
Hi Harry,

Just want to reiterate what Wade has said. Maybe instead of Lease to own we should say we are doing Lease Options. 2 separate agreements are needed. One caution is to have the full amount of the payment so include the portion of the rent being credited in the total lease payment.

Just a note we are using 20% of rent back to the tenants to give them more incentive to buy out at the end. This is taken up in the increase in price of the property when you sell.

As well have a mortgage broker who understands credit review your prospective tenants to see if a 1 year term is feasible.
 

antaynguy

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REIN Member
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Mar 3, 2011
Messages
104
Hi,

I was going through the standard lease and the option to purchase contracts.
I didn`t see anything in there that said the tenant is responsible for repairs.

Antay
 

GaryMcGowan

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Mar 12, 2008
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QUOTE (antay @ Nov 17 2009, 01:39 PM) Hi,

I was going through the standard lease and the option to purchase contracts.
I didn`t see anything in there that said the tenant is responsible for repairs.

Antay
Then you need new contracts. On ours it is clear as day who is responsible for the repairs.I got the contracts from Mark Loeffler, who provided us with the tenant and property. 
 
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