Contracts and Forms
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Seller Forms and Agreements
- Marketing to Get Sellers
- Pre Qualifying Sellers Forms
- Contracts with Sellers
- Lease Purchase Agreeement
What To Have In A Contract
At the very least, a good contract should cover the basics such as: the parties
involved; the street and legal address of the property; the terms of the
agreement, rent, rent credit, sales price, length of agreement, etc.
A good Lease Purchase contract goes a lot further. It will offer protections for both the tenant-buyer and the seller.
Contractual Protections
A good Lease Purchase contract will offer protections to both parties involved
in the transaction. Some of the items that should be included are: a property inspection clause; how serious building problems are to be handled; rights to
access
and insurance consideration. Additionally, a good contract should cover all the
option to purchase requirements. The contract should cover how defaults are to
be handled and have a section (addendum) for adding anything else that the parties
feel are important.
As you can see a good Lease Purchase contract covers a lot of ground. It is rare that you will find all this in a generic contract.
Don't be caught short at contract time.
Have a contract drawn up to meet the specifics of your particular transaction. You should be able to have a contract prepared for approximately $500 to $1,000.
We offer Lease Purchase Agreements for Sellers that have been used as a boiler plates for more than 10 years. Contact us at Team@REISkills.com for more info on Contracts for Sellers - Cooperative Assignments.
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Buyer-Tenant Forms and Agreements
Marketing for Houses and the Right Kind of Sellers
Negotiating A Right Of Assignment and Why It's Important
What Is A Right Of Assignment
Simply put, a right of assignment allows you to transfer your interest in the lease purchase contract to another.
Why Is A Right Of Assignment Important - There are a number of reasons why you want to have the ability to transfer your contract or position in that contract to another.
Let's say part way through the contract term you receive a job transfer. If you just walk away, you could lose your option money and any rent credits. Don't you think that these items have a monetary value. Wouldn't it be nice to assign or
sell your position in that contract and get your money back. Or possibly even make a profit if the housing market has been strong and appreciation has occurred.
What happens if you decide that you don't want to buy the house? Again, you can sell or assign your contract to another.
N one of us have a crystal ball. We can't foretell the future. Circumstances change, financial situations arise, personal problems occur, wouldn't it be nice to be able to protect your investment by selling or assigning your contract. These are just some of the reasons why its important to have the Right of Assignment in your agreement. In fact, we'd almost go as far as saying no right of assignment, no deal. You, of course, have to make that determination yourself Hopefully, you can understand why having this ability is so important in a lease purchase transaction.
Protecting Yourself In The Transaction (This info is only general; get a lawyer to protect your interests!
A) Memorandum of Option - This is a form filed with the County that shows your interest in the property. It typically will show up in a Title search, thus putting a cloud on the title. You can also file your entire agreement, but that is
usually not necessary.
B) Third Party Payee - This is usually done by an escrow company, although there are independent businesses that offer this service. These are sometimes called collection accounts. This type of account will cost you a set up fee and a small
monthly payment. We believe it is a very small expense for a lot of peace of mind. You mail your monthly payment to the third party, they in turn pay the mortgage, taxes, etc. and forward any balance to the seller. You both get an accounting of what has been paid. This is mainly for your protection. You want to be sure the mortgage and taxes are kept current. In fact, we would go so far as to say pass on any property where the seller does not want to use a third party.
C) Title Check - It would not hurt to have a title check performed on the property. You want to be sure the person selling has the right to do so and that there are no current liens on the property. You may also want to see if the seller would be willing to split the cost with you or provide a title insurance policy.
D) Open Escrow - Have escrow instructions done at the beginning of the transaction. You will have established a paper trail demonstrating the intent of all the parties. Always try to use your Escrow and/or Title company.
E) Deed - try to have the seller place the deed in escrow as quickly as possible.
F) Insurance - If possible, have the seller add you to his policy as a loss payee. Be sure you have renter's insurance.
These are just some of the ways to protect your interest in the transaction. It is important that you take all reasonable precautions to insure clean transfer of the property when you decide to exercise your option to purchase.
Being A Tenant/Buyer Means You Never Have To Say You've Wasted Your Money
Lease Purchasing affords the tenant/buyer a wonderful opportunity to get into a home today, that he or she can buy tomorrow.
But what options are available at the end of the contract?
Fortunately, Lease Purchasing provides multiple options here also.
Imagine having lived in a nice house in a good neighborhood for a number of years.
Now comes decision time. Let's examine the options you have.
First, you can exercise the option and buy the house. You've already negotiated the terms of the sale, so you know what you'll be paying for the property. But, you may also have an option within this option.
Let's say the housing market in your area has softened and the home is worth less than when you contracted for it. Don't you think the seller may be willing to re-negotiate the terms of the deal rather than get the house back. There's a good chance he will. To re-cap, you can exercise the option or re-negotiate.
Your second choice is to not exercise the option. In this case, you've rented a nice house for a number of years and had great terms for that length of time. Here comes another big but, if you've had a good record of payments with the seller, and you would like to stay in the house, possibly the seller would consider turning your contract into a straight rental.
A third option has the potential to be a profit maker for you, the tenant/buyer. The end of the contract period is approaching and for whatever reason, you don't want to buy the house. What do you do? Well, if the real estate market in your area has been strong, why not sell the house and make a profit on the deal.
What you say, how can I sell a house I don't own? It's simple. You exercise what is called a simultaneous close. Remember, you have an option to buy this house at a set price, if it has appreciated over the length of the contract, you can sell it to a third party for a price greater than your option price. You pocket the difference. Instant profit!
Well, there you have it. Options, options, and options within options. As you can see, Lease Purchasing provides the tenant//buyer with the flexibility to be a "smart renter".
No longer do you have to throw your monthly payment down a black hole.
Make the best use of your money, rather than letting your landlord use it for his new car payment.
We offer Lease Purchase Agreements for Sellers that have been used as a boiler plates for more than 10 years. Contact us at Team@REISkills.com for more info on Contracts for Tenants and Buyers - Cooperative Assignments.
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Contracts and Forms For Real Estate Investors - New and Experienced For Sellers or Landlords of Homes |
