Lease Option Arrangements

[Porsche-O-Phile]

Does anyone know about these?

[red-beard]

Why would you go into a business arrangement with the plan of tricking/screwing the other person? This is wrong on so many levels.

[HHI944]

A bit sleazy??

I've looked at a few lease options and am in very slow negotiations with my current LL for one. If he ever pulled a BS stunt like that, he knows there would be very little left of the house and no conclusive evidence of foul play. Of course, he's a cool guy and we get along very well so neither of us would do something that sleazy.

[HHI944]

Not a lawyer, but do have a little knowledge under mt belt: entering into a lease option agreement with the intent if terminating for your own financial benefit could be construed as fraud and if the guy you screw lawyers up, you could get hammered (think treble damages with damages loosely defined as everything they paid to you......ever)

[stomachmonkey]

wow

[Porsche-O-Phile]

Just what I've heard...

Basically if the tenant is late paying even once, if they make an unauthorized alteration, etc. they're in breach of the agreement. I really hate the thought of operating like this, truth be told - I'd rather just rent the place straight out (which is likely what I'll do) or sell it eventually, or sell it on a good faith purchase option to someone who really wants to buy it (thereby avoiding all the listing fee nonsense and just paying an attorney down the road to broker a straight FSBO type transaction). I would much prefer to just do a "normal" lease agreement or a good-faith purchase option, but my current financial situation is making me have to at least consider what other options might be available, attractive or not.

Your responses seem to align with my own thoughts - yes it could result in lots of additional income from the same property but it's scummy - even more scummy than regular landlording, and it sounds like there are potential legal hassles too, so it's probably not worth it (ethical matters aside).

Thanks - I think I know my next course of action here (i.e. not to pursue this, just rent it straight up).

[zipinitaly]

Wow, just wow....I honestly can't believe you posted this out for the forum to read. Better find your nomex suit, flames are coming!

[chocolatelab]

Slow your roll. There is nothing wrong with a lease option.

In fact I argue its a better plan.

Having 5-10k up front in the lease option gives you more security. Add a couple bucks to the monthly that will apply to final purchase price.

Ideally you will complete the sale with the tenant at some point.

The great part about the lease option is that the tenant will have more vested in the property and probably will take better care of the property.

If they don't and move elsewhere you have more funds to cover repairs.

Thats not sleazy or unethical in any fashion.

Now if you just hang out waiting for a check to be 5 minutes late and evict him then you are a douche

But I don't think thats where you are going with the plan, but its good to know your options.

I currently have a property out as a lease option. Tenant pays what I owe, plus property taxes plus how, plus a little extra non refundable option money each month toward principal.

He loves that fact that he is paying toward the house and I love the fact my nut is covered plus some.

If he eventually bails thats fine with me, if he completes the purchase that fine also.

[Jagshund]

Yet another item to add to my, "What's Wrong With America" list. In fact, this is easily top five.