Rent to Own

[savemart55]

What is the name of your state? Texas
I decided to rent my home for a year or two since the market is pretty bad for sellers in the Dallas area. I have had several prospects ask if I will do a rent to own. I do not have a "due on sales" clause in my mortgage.
From reading your forums though, it seems that a lot can go wrong with those deals. Can I just rent the house on a lease form and give the renter a "option to purchase" contract as a separate document which commits me to sell the house to them at a certain price for a period of a year or two?
I have seen options in commercial deals such as land sales. I want the lease to be completely separate so that I can evict instead of foreclose if necessary.

 

[HomeGuru]

What is the name of your state? Texas
I decided to rent my home for a year or two since the market is pretty bad for sellers in the Dallas area. I have had several prospects ask if I will do a rent to own. I do not have a "due on sales" clause in my mortgage.
From reading your forums though, it seems that a lot can go wrong with those deals. Can I just rent the house on a lease form and give the renter a "option to purchase" contract as a separate document which commits me to sell the house to them at a certain price for a period of a year or two?
I have seen options in commercial deals such as land sales. I want the lease to be completely separate so that I can evict instead of foreclose if necessary.

**A: yes you can but my question to you would be, why not just rent the home rather than dealing with an option.

 

[JETX]

If you are really intent on doing a 'rent to own' and still want the eviction option, you might consider:
Most of these rent to owns have a higher monthly rent than 'normal' and the rent 'overage' is applied to the purchase if exercised. If the purchase option is not exercised by the 'renter', then you get to keep the overage as it is converted to rent. The way to do this is to have your lease include a referrence to "Addendum X" and in that addendum you spell out the terms of the 'purchase option'; including the price, that '$x' per month is to be applied to the purchase in the event that the buyer exercises and the forfeiture of the funds if they don't or if they breach the lease. That way the lease remains as such until the renters exercise the option to purchase.

 

[savemart55]

Thank you both for your responses. To answer Home Guru's question, I have heard that rent to own tenants take better care of the house, so I would prefer a tenant that might be more responsible. Since I am going to sell the house eventually, the easiest sale would probably be to the existing tenant.
The addendum sounds like a good idea from Jetx. I will look into that. What I would like to know is if I can have 2 separate documents that are legally separate from each other, where I have only a Landlord, Tenant relationship during the lease period, and another document that gives the Tenant the option to purchase the house at a particular price during a specific time period. There just seems that there can be a lot of complications with a rent to own contract. I am not doing an owner finance. These folks just want to wait a year or two before getting their own new mortgage. I appreciate your time.

 

[HomeGuru]

Yes you can and should have 2 separate documents.

 

[savemart55]

Thank you for your advice

 

[HomeGuru]

You are welcome. Whatever happened to your commercial eviction and business partnership?

 

[savemart55]

Been a while, but on the warehouse fire, I moved out of the warehouse in order to gain some leverage. An attorney from the biggest law firm in Dallas was stumped at my case, but she said that she learned a few more clauses that should be in the commercial leases that she does. I went to a third attorney who was an insurance specialist attorney and he was a whiz. He worked out a settlement where each of the parties paid a portion of the costs, we remodelled the place together and we are now tenants again.
As for my ex-partner he is close to bankruptcy, so I got out of that deal at the right time. I have expanded 5 fold since I went on my own.
How is your business doing? You would probably have to change the name of your firm to Chase, Ambo, and Dingaling, but why isn't there a 900 # that you can call at $4.99 a minute to talk to a real attorney? I would use it simply to get a fast answer when I need it. You could staff it with semi-retired attorneys who answer the phone from their beachfronts in Florida, or entice new attorneys by offering them a salary plus the follow up cases as they develop.
On the commercial eviction, my friend was evicted. The judge did not allow me to testify. later the Landlord admitted to me that they had made a mistake.

 

[HomeGuru]

Been a while, but on the warehouse fire, I moved out of the warehouse in order to gain some leverage. An attorney from the biggest law firm in Dallas was stumped at my case, but she said that she learned a few more clauses that should be in the commercial leases that she does. I went to a third attorney who was an insurance specialist attorney and he was a whiz. He worked out a settlement where each of the parties paid a portion of the costs, we remodelled the place together and we are now tenants again.
As for my ex-partner he is close to bankruptcy, so I got out of that deal at the right time. I have expanded 5 fold since I went on my own.
How is your business doing? You would probably have to change the name of your firm to Chase, Ambo, and Dingaling, but why isn't there a 900 # that you can call at $4.99 a minute to talk to a real attorney? I would use it simply to get a fast answer when I need it. You could staff it with semi-retired attorneys who answer the phone from their beachfronts in Florida, or entice new attorneys by offering them a salary plus the follow up cases as they develop.
On the commercial eviction, my friend was evicted. The judge did not allow me to testify. later the Landlord admitted to me that they had made a mistake.

**A: thanks for the update and the law biz ideas.