Investor · San Antonio, TX · Member since 2016 · 4 posts · 0 votes
If I am not collecting a down payment (except for a security deposit = to one month's rent), I am leasing the home at a fair market price, but I credit all of the security deposit and $200/month of rent towards a down payment is this considered an executory contract in Texas?
The tenant and I have agreed upon a purchase price and there is an option to purchase clause but there are no "triggering events" for the option to be exercised by the tenant, they can buy the house at any point in there lease or they can walk away if they so choose. More than anything, it is really restricting me from selling the house to anyone until the tenant's lease expires. I did a credit check and employment/income verification to verify that the tenant could afford and probably obtain bank financing in the future if they decided to exercise their option to purchase, to avoid any issues with Dodd Frank.
Does anyone have any insight on whether or not this lease agreement would be considered an executory contract in TX?
If you are going to wade into lease options, I absolutely suggest you see a RE attorney and have him/her draw up the contract. It is my understanding that lease options have become much more risky due to changes in the law, and the burden is mostly on the landlord.
If you are going to wade into lease options, I absolutely suggest you see a RE attorney and have him/her draw up the contract. It is my understanding that lease options have become much more risky due to changes in the law, and the burden is mostly on the landlord.
This resource was a big help to me when I first thought about doing this with my primary residence recent sell. I decided not to try the lease option to purchase, I'm in North Dallas area and the headache and timing just seem tricky, but to each his own. I have seen Craigslist listings adverting these options in my area.
There's only a handful of Attorneys that are knowledgable enough to do these "rent-to-own" or deferred seller finance type transactions and they'll probably want to know and trust that you're not out to screw the tenant over.
I closed on this type of transaction this summer and it was my first. I'd recommend finding a real estate attorney in your area to help guide you.
@Fred Heller is giving you solid advise. You can get yourself into some expensive trouble if anything single item is out of alignment from the contract to hire you handle the money.
@Peter Schuyler That's a great site and I bought the attorney's book a couple years Beck when venturing into Texas Investing. Great handbook for Texas investors!
@Jerry Starkey 1st, I never take a deposit on a LO. They pay me an assignment fee (AKA option fee)
2nd if you are giving them a rent credit out of each month that the buyer will use toward the down payment, you have to have the $200 in separate funds, otherwise the lender will baulk.
We simply offer a seller concession and it is applied to the buyer's closing costs.
I have the secret sauce to this issue: I have a better way to do they deal that will allow you to sell your houses, capture more money on the deal and then make money on the back end. Win, Win Win. They way your setting up the deal is going to hazard you to a lot of risks. Risk=Dollars lost.