Getting CA's Straight

[mpine 0]

mpine you have your forms messed up on one of them.

 

CA residential lease agreement- Between you and the seller, only the 2 of you sign

 

Option to purchase- Between you and seller, only the 2 of you sign

 

CA Assignment of Agreement- you, seller and t/b all sign

Can't the CA Residential Lease Agreement and the Option to Purchase be combined into one document.........a CA Residential Lease with Option to Purchase?

 

Why do you need to make 2 separate documents here?

 

Curious

I believe we want them seperate as to show the homeowner that the contracts are in there best interest.

 

the protection of a residential lease agreement, and a seperate option, so the t/b can not claim equitable interest unless they excercise there option.

 

Mike

[MichaelC 160]

I believe we want them seperate as to show the homeowner that the contracts are in there best interest.

 

the protection of a residential lease agreement, and a seperate option, so the t/b can not claim equitable interest unless they excercise there option.

Correcto-mundo! The man is good!

[Sold ! 0]

Let me play "Devil's Advocate" here for a moment:

 

If you KNOW that you are doing a CA from the very start with this property and your full intent is to assign it, Why would you bother doing separate Lease and Option contracts?

 

You are not Sandwiching it, therefore your interest ends with the assignment. You are basically negotiating a Lease with an Option to Purchase between 2 parties. It's as if you are the consultant, almost.

 

Unless the seller demands a separate Lease and Option agreement to protect himself (just like we would with a sandwich deal) I see no need for the 2 documents.

 

Another argument being that if the seller and you were going into it as a LO for you personally (with the intent to sub-let), you'd never bring out the 2 documents with the seller, so why do it now?

 

Somebody please argue the case for me so I know it's time to shut up and stop arguing. Or do I have a valid Devil's Advocate position?

 

Appreciate it.

[Kimberly 0]

If you KNOW that you are doing a CA from the very start with this property and your full intent is to assign it, Why would you bother doing separate Lease and Option contracts?

Because one thing going for you with the CA is that it's ALL in the seller's best interest. That's why you keep them separate even, or especially, in the CA.

 

Even if you put them together, you'd still have the same number of pages. So why not keep them separate? It's not saving anything to put the two together.

[Sold ! 0]

Because one thing going for you with the CA is that it's ALL in the seller's best interest. That's why you keep them separate even, or especially, in the CA.

So, why not write the CA Lease with an Option to Purchase all in the seller's interest, then?

 

Devil's Advocate

[mpine 0]

Because one thing going for you with the CA is that it's ALL in the seller's best interest.  That's why you keep them separate even, or especially, in the CA.

So, why not write the CA Lease with an Option to Purchase all in the seller's interest, then?

 

Devil's Advocate

Rich,

 

If you use the Lease with option to purchase, the contract is favoring the t/b and not the seller. The biggest selling point is "Mr. Homeowner, look at how protected you are, read through the contracts and see how they are in your best interest to keep control of your property hands off.

 

 

Mike

[Doug Pretorius (ON) 9]

Rich, I feel the need to jump in here and toss around a few clichés:

 

"Don't reinvent the wheel."

"If it ain't broke don't fix it."

 

Using separate lease and option agreements is the court-tested, mother-approved way to protect the seller's interests. If you don't separate them then it's possible a judge will declare the L/O as a sale, and the seller will have to foreclose instead of evict, to get the buyer out.

[Sold ! 0]

Yes. I understand all this.

 

But, if I can backtrack a bit, when WE do an LO with the seller with the intent to sandwich it, we are doing a straight Lease with an Option to Buy Contract, right? 1 contract....(which I can assign if I want to)....with both Lease and Option included.

 

We then turn around and find a TB, with whom we do a separate Lease as well as an Option to Buy. 2 contracts. They can NOT assign these.

 

One contract (LO) between the seller and us. 2 contracts (Lease and Option) with the TB and us. Makes perfect sense, in the case we need to evict.

 

In the case of our Cooperative Assignment, are you saying that we now need to do a Lease and a separate Option to Buy with the Seller?

 

And then assign both of them as separate entities to the TB?

 

 

I am not trying to re-invent the wheel, here, folks. Maybe I just can't get my point of confusion across in words. But, it just seems to me that if we can do a regular Lease with an Option to Buy with one contract and then sublet the place to a TB, why we can't do a CA Lease with an Option to Buy and assign it.

 

{thinking....thinking.....thinking........}

 

UNLESS.......(I may be getting warmer....) you are saying that the tenant/buyer is not as smart as the investor and actually wants to live in the place and maybe buy it some day. Therefore, we are structuring the SAME DEAL we would structure for ourselves with the tenant/buyer...but now, we are doing it FOR THE SELLER !?

 

2 Contracts (Lease and Option) for us From the Seller that we then assign to the TB, wash our hands, grab the option money and walk away from the whole deal.

 

Is that the philosophy here?

 

That, then, would make sense with all the above:

 

CA residential lease agreement- Between you and the seller, only the 2 of you sign

 

Option to purchase- Between you and seller, only the 2 of you sign

 

CA Assignment of Agreement- you, seller and t/b all sign

 

And in the Assignment Agreement, you would have to mention both documents that you are assigning, right?

 

Gawd, I hope I am finally on the right track, here..........

 

Confused with a Big Hurricane Target on his Back in Florida

[Kimberly 0]

But, if I can backtrack a bit, when WE do an LO with the seller with the intent to sandwich it, we are doing a straight Lease with an Option to Buy Contract, right? 1 contract....(which I can assign if I want to)....with both Lease and Option included.

Because that is in OUR favor. If you read through the contracts for Sandwich Leases the entire contract is in OUR favor, not the sellers -- as much as is possible.

 

In the case of our Cooperative Assignment, are you saying that we now need to do a Lease and a separate Option to Buy with the Seller?

 

And then assign both of them as separate entities to the TB?

Sold, you're trying to make it too complicated. When doing a Cooperative Assignment. You use the CA Lease and the Option to Purchase and the CA Assignment form. The ONE assignment form covers both contracts.

 

UNLESS.......(I may be getting warmer....) you are saying that the tenant/buyer is not as smart  as the investor and actually wants to live in the place and maybe buy it some day. Therefore, we are structuring the SAME DEAL we would structure for ourselves with the tenant/buyer...but now, we are doing it FOR THE SELLER !?

 

2 Contracts (Lease and Option) for us From the Seller that we then assign to the TB, wash our hands, grab the option money and walk away from the whole deal.

 

Is that the philosophy here?

Now you're getting it!

 

And in the Assignment Agreement, you would have to mention both documents that you are assigning, right?

Yep.

[MichaelC 160]

I'd add my two cents here, but everyone has already said what I would have. Is it clear, Sold!? Seems to me you are over thinking and over analyzing the process.

[Sold ! 0]

I'm sure I am.

 

I just want to get it all straight in my head before I have to get it straight on paper, where it will count more.

 

Thanks for the replies. It's slowly sinking in.

 

Also, Kimberly,

  Sold, you're trying to make it too complicated. When doing a Cooperative Assignment. You use the CA Lease and the Option to Purchase and the CA Assignment form. The ONE assignment form covers both contracts.

 

I do not have MC's forms for a reference point. I am coming from another course (MC knows it very well) with different, yet similar, paperwork. That's why I am so confused (really NOT stupid...) You guys are all taking about documents I do not have so I have to take the ones I DO have and try to make sense of them in regards to what yours might look like and what you are discussing here.

 

I'm not trying to push buttons; just trying to understand.

[Doug Pretorius (ON) 9]

Rich, I don't believe anyone on this forum thinks you're stupid OR trying to push buttons. We've all been in that place called Confusion before!

 

For the record, I'm not using Michael's contracts (although I do have them), because the situation is a little different here in Ontario.

 

Anyway, you pretty much hit the nail on the head. You are setting up the deal for the seller in a very similar way to how you would set it up if you were the seller. Using separate contracts favors the SELLER, while using a single contract, favors the buyer (unless you're in Ontario, then it doesn't matter, LOL! That's another story though.)

[-Tony- 0]

think of it this way, the home owner is steping into your shoes if you were to do a sandwich l/o, it just gives a little protection to the homeowner.

[Kimberly 0]

I do not have MC's forms for a reference point.  I am coming from another course (MC knows it very well) with different, yet similar, paperwork.  That's why I am so confused (really NOT stupid...)   You guys are all taking about documents I do not have so I have to take the ones I DO have and try to make sense of them in regards to what yours might look like and what you are discussing here.

Sold,

 

Sorry! Seems like you've mentioned that before and I forgot. Whatever course you have probably has two sets of documents one for when you are leasing from your seller and another set for your deal with your tenant/buyer. You'd want to use the set that was for your deal with a tenant/buyer for a CA. Keep everything in the favor of the seller, except for your out in case you can't find a tenant/buyer for some reason.

 

Make sure the date of the lease is in the future (2 mo. or so) and you have a line in there stating that the original tenant/buyer can cancel at anytime prior to the start date of the lease. It should also state that the lease and the option are non-assignable without the seller's written consent.

 

On your assignment make sure it refers to both the lease and the option. Also, make sure the assignment fee (option money) is mentioned and it states that it applies to the purchase price if and when the house is bought. You want both your tenant/buyer and your seller to release you from any and all liability on the assignment form.

 

Does that help?

[Sold ! 0]

Sure does.

 

Talking it all through in my own head and actually working with the contracts that I have versus MC's contracts you all speak about has been a big help.

 

I'm ready !