Renting to a Friend

[Linda DiMartino]

I have a townehouse appraised at $140,000. My "boyfriend- close friend" is going to rent it from me at a low price of $650.00 monthly with the option to purchase it from me at the end of 1 year. I am giving him this special rent price because of our relationship. If the relationship turns bad, do I have the right to change my mind and terminate the lease or ask for more money? money?

 

[ed]

No, you do not have the right to terminate or change the contract if the relationship goes bad. The terms of the contract itself determine the rights of the parties. If the contract has not yet been executed, you could put in a provision, making the contract revocable if certain conditions are met. Then if the conditions were met, you could revoke.

 

[16952]

Are you going to have a rental agreement or contract? "Judge Judy" gets a lot of these type cases, where things go bad over money,
You're giving the guy a break, but can you afford to let him be there free?
If things go bad, and the place is distroyed, can you recover? If he hesitates to sign, reconsider renting to him- I tried renting once to friends-

 

[Tracey]

My best advice on how to draft the lease/option to purchase is to assume that you two will have a horrible breakup 2 weeks after signing the papers and draft the papers to cover that contingency. Be fair, but address potential problems. OTOH, don't spend all your time focusing on the possible negatives - you might get so bogged down that you lose sight of the goal - to rent/sell your friend the condo.

Use a real estate broker for the actual sale. When 2 non-brokers sell a house, problems often arise because neither knows the relevant state laws on disclosure, deeds, inspections, escrow, contracts for sale, title insurance, etc. If the 6% commission seems too high, talk to a real estate lawyer. View the commission/laywer fees as an advanced insurance policy. Even if you have no problems with your friend, the deed you draw up may put you on the hook to the people HE sells the place to eventually.

Note: you cannot make the lease/option contingent on your continued relationship. That's too close to an unenforceable contract for sex (the reduced rent represents the 'fee'). You may find that you can't enforce the contract terms!

Even if you've already signed the papers, you two can go back and amend the contracts to reflect your new agreements.

Good luck,
Tracey

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This is not legal advice and you are not my client. Double check everything with your own attorney and your state's laws.