monthly credit with lease option

[antaynguy]

Hi everyone,

I have been reading over some of the lease option agreements and some separate the rent from the montly credit payment and some called the whole thing rent. Also, I noticed Barry McQuire has mentioned that we should separate the lease agreement from the option agreement.

1) Is there any legal implication? and where would be a good location to put the monthly credit the lease or the option agreement?

Thanks!

 

[Cargren]

We do two agreements:

1) the typical provincially recognized lease agreement, just as you would for a any rental situation. No mention of Option Agreement or deposit.

2) an Option to Purchase Agreement. This spells out all the terms related to the Option, and also refers to lease amount.

Hope this helps.

Rob

 

[antaynguy]

QUOTE (Cargren @ Jan 26 2010, 03:45 PM) We do two agreements:

1) the typical provincially recognized lease agreement, just as you would for a any rental situation. No mention of Option Agreement or deposit.

2) an Option to Purchase Agreement. This spells out all the terms related to the Option, and also refers to lease amount.

Hope this helps.

Rob

Hi Rob,

Where would you put the monthly credit? Do you mention it in the lease agreement or in the option agreement? If in the Option agreement, do you include the montly credit in the rent amount in the lease agreement.

1) scenerio 1
In the lease agreement
ie. Rent = 1500 and 200 will be credited to the purchase of the house

or

2) scenerio 2
In the Option
Monthly credit = 200

In lease
Rent = 1300

Thanks!

 

[Dan_Eisenhauer]

The monthly credit, future purchase price, and every thing related to the Option get covered in the Option Agreement. Do not mention the OA in the lease.

When writing your lease, be sure to put all the payments in the rent. I made the mistake recently of putting just the "rent portion" in the lease, with the Option payments covered in the OA. The tenant defaulted, and I am only able to go after that amount stated in the lease. LESSON LEARNED!!

I know Barry recommends using two agreements, and I will from now on. However, my BC lawyer recommends using just one agreement. His belief is that if you have to go to court over it, the TB will tie one to the other in any case. There are two schools of thought on this topic.

 

[markl]

Dan it sometimes takes something like that to put us on the correct path. It has happened to the best of us.

The full rent amount is stated on the lease agreement. The option agreement does not come into play until they action it. Therefore there are no credits until they action the agreement.

LTB will let you go after the full amount on the lease. If it is a condo include the condo payments in the lease agreement.

 

[Cargren]

QUOTE (antay @ Jan 27 2010, 09:13 AM) Hi Rob,

Where would you put the monthly credit? Do you mention it in the lease agreement or in the option agreement? If in the Option agreement, do you include the montly credit in the rent amount in the lease agreement.

1) scenerio 1
In the lease agreement
ie. Rent = 1500 and 200 will be credited to the purchase of the house

or

2) scenerio 2
In the Option
Monthly credit = 200

In lease
Rent = 1300

Thanks!

Neither scenario, but closer to #2. Lease agreement shows full lease amount of $1500 with no mention of credits or option anywhere.

Option to Purchase agreement states a monthly credit of $200 out of the lease (and mentions lease agreement dated such and such a date).