Lease Option - House went down in Value

[MichaelC 160]

Just received a call from the owner. She yelled at me saying the tenant wants to buy for whatever the house appraises but she wants her $5,000 for use for her closing costs.

First, tell the owner that yelling is unacceptable. If she talks to you, fine. If she insists on yelling, tell her to call you back when she is in a better frame of mine. Then, hang up. And I'm quite serious.

Next, the tenant can say whatever she wants about only paying appraisal price. Unfortunately, that's not what is written in the contract. Whether or not the homeowner wants to renegotiate the deal is strictly up to the homeowner. It no longer involves you. Tell her as much. Seems everyone is now interested in renegotiating the deal to suit their interests. The real world doesn't work this way.

And she says my forms have not been approved by the real estate comission. Yes, they are not. The problem is - I have a RE lisence.

The forms needn't be approved by the RE Commission. As long as the issues in question aren't in violation of state laws, that contract is valid. You being a licensed Realtor may or may not enter the picture, depending upon how you represented yourself. Seems to me you acted as a private party in this deal, representing neither homeowner nor tenant/buyer. You were acting in your best interests as a principal in the deal.

Now they both are after me.

Perhaps. Perhaps they are just testing your mettle, Xena. They need some legal grounds to win their argument, however. Emotions and volume don't cut it in a courtroom.

My forms are the great ones, can they just bluntly say they are ILLEGAL?

Sure, they can say your forms are illegal. Doesn't mean they are, though.

Bottom line, Xena: contact an experienced real estate attorney. You're a Realtor. Either you or your Broker must know a good one. He/She will probably give you a free 15 or 20 minute consultation and review this deal and the possibilities.

[Adam King (MI) 1]

Xena,

First off, I agree with MC and Doug that this agreement looks dead in the water for the t/b. But I do have some things to suggest. NOT as an attorney, just my personal opinions so things are a little more clear.

 

c) Each month that the rent is paid on time, starting on _______________________ and ending with rent paid through _________________________, Tenant shall receive a credit of $________ toward the purchase of the property.

 

Tenant shall receive an additional credit of $________ as NON-REFUNDABLE OPTION CONSIDERATION which will only be applied toward the purchase price if all outstanding fees to the attached rental agreement are paid on or before the due date.

 

"D" Doesn't need to be there. It needs to be in the rental agreement.

 

e) To exercise this option Tenant must give seller written notice at least 90 days before this option expires. In the event that the Tenant does not give written notice of Tenant’s intention to exercise this option to purchase said property, and this written notice is not received by Landlord at least 90 days prior to the option’s expiration date, then this option is null and void.

 

This shows that the agreement in its entirety should be construed as "null and void".

 

f) This agreement is NOT an installment sale or land contract or contract-for-deed agreement or equitable mortgage, it is merely an option to purchase agreement about the above referenced property under the terms and conditions stated in this agreement.

 

Just simply lovely!

 

This option is subject to Landlord’s ability to transfer clear title to the property.

 

Guess what, you couldn't transfer title period. This right here may void the entire agreement as well. I also see that you added a "there will be no Realtor commission" line in the option. This is favorable to MI disclosure.

 

Prospective Tenant understands that Prospective Tenant does NOT have a valid lease or option to purchase said property UNTIL Prospective Tenant makes both other payments described above on time and signs all further paperwork with Landlord, including Lease Agreement, Option to Purchase Agreement, Disclosure Forms, etc. In no case may the Prospective Tenant enter or otherwise occupy said property until ALL conditions and terms in this agreement have been fulfilled. TIME IS OF THE ESSENCE!

 

Over CYA what? Sheesh..

 

Although I disagree with "screwing anyone", it seems to me (from hearing just your side of the story), that the tenant never fulfilled their obligations and therefore may be pushing you around to get their option back or something to that nature. I am sure there's something else here we're missing. Something like, why is this post in May if the whole thing expired in Feb?

Regards,

Adam

[Gary (MO) 0]

Doug, I guess I don't see Guest's point. If I understand what he is saying correctly, it is somehow the investor's fault or the L/O technique's general flaw that the t/b didn't exercise their option in a timely fashion or that the appraised value of the property decreased. That's simply ridiculous.

 

Like MC pointed out with the stockmarket or anything else in life - there is risk and there is reward. We all have a choice with our actions - and we all must live with the results of our actions, good or bad. In this case all three parties have made poor decisions (in my opinion) and they are each going to have consequences accordingly.

 

It has become too easy in America today to not take responsibility for your own actions . As MC pointed out that's how we get people suing for spilled coffee and it's that same mind set (apparently shared by Guest) that allows us to 'spin' an investment gone bad (or perhaps began bad) into a supposedly common theme of "the t/b is disposable" mindset when it comes to L/Os. It's that same mindset that is responsible for a decline in ob/gyns not being able to deliver babies any more and rising malpractice insurance costs for many providers.

 

I could go on but I won't. What happened to people with a sense of integrity and dependable responsibility? I know Guest is entitle to his or her opinion and I'm sure he or she is a decent guy or gal. I must say though that the Guest and I are on completely different poles on this.

 

Gary

 

PS I'm not sure why this is such a hot button for me. It's not Guest's opinion that bother's me as much as his or her thought process and erroneous conclusions behind the opinion.

[Adam King (MI) 1]

Gary,

I'm not a little guy. As a matter of fact, most of the fights I’ve gotten into when I was younger were with the school bully after he picked on the little guy. And I have always beaten their arses to the dirt. (The others well....that's a long story)

 

I agree with you that "Guest" came off as being a little sarcastic, or even negative towards investing with Lease Options. But I can tell you this, sometimes other opinions are good to have even if they seem outlandish or are from examples of “someone else’s” screw ups. (Notice MC had the integrity to not erase his posts)

 

A seller called me the other day and said; Mr. King, we want to go with your company, but we have had countless people tell us that lease options are a bad route. I asked him if he knew the cash out rate around the country on the average lease option. There was a moment of silence and then I cut back in. 20%. There was another moment of silence. You know Mr. Seller, my cash out rates are much higher, you know why? No, he said. Because I have experience, I said. How many lease option transactions have your friends had? Another moment of silence….

 

I think you're a lot like me. When I think I’ve been done wrong, or someone knocks something they have no experience with, it drives me nuts. But sometimes you just have to let them speak and take a day to let it sink in. Some of the people I have disliked the most in this business have taught me the greatest lessons about myself.

Although I do occasionally want to pound someone, I just visualize it and let it go.

We know who we are and what we do. We know the truth from being in the trenches. We know when to stand and when to surrender.

As my best friend's late mother used to say, I'll take it from where it comes from for what it's worth....

Regards,

Adam

[Doug Pretorius (ON) 9]

Gary, I understand where you're coming from. Notice that I specifically said that I don't believe the investor (Xena in this case) is at fault, nor is the L/O technique fundementally flawed. The only part of Guest's comment that I agreed with is that when a sandwich L/O goes bad, the investor is sometimes left with fewer options than if they owned the property.

 

As we can see from Xena's situation, she's now stuck between an irate buyer and and irate seller. If she owned the property then the irate seller would be eliminated, and a huge chunk of the unreasonable selfishness with it. She could then (again, only if she wanted to) extend her agreement with the buyer, without any problem.

[MichaelC 160]

As we can see from Xena's situation, she's now stuck between an irate buyer and and irate seller.

Only if she allows herself to be. Her option with the homeowner has expired, and the tenant/buyer's option with Xena has expired. There doesn't appear to be any deal remaining to be in the middle of.

[Chris&Kez 0]

f) This agreement is NOT an installment sale or land contract or contract-for-deed agreement or equitable mortgage, it is merely an option to purchase agreement about the above referenced property under the terms and conditions stated in this agreement.

 

that right there sums it up anyway doesn't it?^

 

Funny that, I spoke to my bank ,and my ex the other day, turns out that my half of the property is now worth more than what I paid for it.

We had already agreed to pay me out a certain amount beforehand, although seeing how 13 yrs have past since that time, I think it's only fair that I now waltz back in and capture some of the benefits and money ex has since put in, otherwise i might tend to feel ripped off....

I wonder if they'll renegotiate and give me an extra 15 K cash out of it?

PFFTT , yeah right.

 

The TB needs to get a life here, or cough up her extra 1K to extend her option and continue with the agreed deal.

Either that the party's 'all over rover'

 

As far as your seller goes...hmm, maybe talk her into waiting for another tb and give her all of the option money?

Beats having no cash and still having the same home she didnt want to keep in the first place.

Greedy people... sheesh

 

By the way guest, I agree that 'other' opinions are healthy, but is it necessary to hide behind your red guest nic? Kinda shoots your credibility in the foot from the get go from where we sit.

Constructive/destructive opinions appear to be welcome here, no biggie ...I have just never addressed ayone as Mr Guest before...OH, HANG ON....once, at Liza's wedding

 

Us

[Guest Guest_Barry]

Adam, you wrote:

 

Actually, the option should say it "is" contingent upon the tenant/buyer obtaining a mortgage.

 

I think Xena's form was correct. The agreement is not contingent upon the t/buyer getting financing, meaning that the agreement is binding regardless of whether or not they get financing.

 

In other words, the financing is the t/buyers responsibility and they are not off the hook if their financing falls through.

 

Xena,..hope this all works out. Hopefully the homeowner and tenant buyer will settle down and work towards accomplishing the goal of conveying the property.

 

Barry

[Xena 0]

Just wanted to thank everybody for your opinions.

I will keep posting the results here.

 

I warned my broker somebody will call him concerning this. He wanted the copies.

He looked them through, asked about the 90 day notice, saw the expiration date and advise to consult an attorney and just filed them into Bad Boy file.

 

 

Thanks again

[Adam King (MI) 1]

Barry,

You're right, I actually explained myself in the last post and then read it again and deleted it. It is fine just the way it is in her agreement.

 

Xena,

Best of luck, I think you should be just fine. But make sure you don't get pushed around anymore if that's the case!

Regards,

Adam

[Lydia 0]

Michael,

 

I liked the way you handled the guest who apparently had "negative intent". And it worked out beautifully---two mature adults acting like mature adults while sharing conflicting opinions. I always appreciate getting all sides to a situation.

 

I have been on some boards (which I do find very useful) on which people are downright RUDE!!!

 

I even jumped into a chat on a highly recommended REI site and the people there were so rude to each other (not to me! I was just observing, for the most part) I had to leave. Now, the participants might have been comfortable talking to each other that way, but I didn't want to be a part of it.

 

I can't visit this spot without noticing what really great people participate in the discussions here.

[MichaelC 160]

I liked the way you handled the guest who apparently had "negative intent". And it worked out beautifully---two mature adults acting like mature adults while sharing conflicting opinions. I always appreciate getting all sides to a situation.

Actually, Lydia, our "Guest" didn't have negative intent, and said as much. He just had a differing opinion and I have no problem with diversity.

I have been on some boards (which I do find very useful) on which people are downright RUDE!!!

 

I even jumped into a chat on a highly recommended REI site and the people there were so rude to each other (not to me! I was just observing, for the most part) I had to leave. Now, the participants might have been comfortable talking to each other that way, but I didn't want to be a part of it.

HAHA! I know just what you're talking about. I hear that often from other members, too. They visited another board or two and were shouted down for asking a question that another member thought they should already know. Or, they answered a question in a way that another member disagreed with. All hell breaks loose! Some big egos in this biz. Combine that with some small grey matter in the cranium, and the results are as you describe. My advice is to watch the cat fights from the sidelines, but don't enter the fray. I save my passion and energy for arguing with my in-laws .