I am the owner, and I have a loan on this house, I have a Contract(s) with a Couple that we had setup through a Century 21 Real Estate agent, that did this as a favor to us to set up a Lease and Option to buy. The Contract consists of a ONE TO FOUR FAMILY RESTDENTTAL CONTRACT (RESALE) TAR 1601 / TREC 20-11, and a Third Party Financing Addendum for credit Approval -which is TAR 1901/TREC 40-5, and a
ADDENDUM FOR RESERVATION OF OIL, GAS,AND OTHER MINERALS, and a Buyers Temporary Residential Lease TAR 1911/TREC 16-5, and a Plat Record.
In this contract the Renters agreed to a set price for rent, and of that Rent $100 will go towards the final sale price, they also gave us 10,000 (not into escrow) which will be offset from the Final Sale Price. We made this deal at below market value. They do not have good credit, and are two years and one month into the lease and have broken three of the contracted items multiple times (Improvements without written approval, multiple HOA complaints (we have this listed as a cause of breach of contract), using the Residence as a place for Business.
For the life of me I cannot ascertain if this is one of those illegal Contracts or not... and I need to figure out if it is bad news contract, if I can evict, or should I wait until 11 months from now when lease is up? What is best way to ascertain this ?
Hate to be the bearer of bad news, but it's time to seek legal counsel.
First, be aware that things could get a lot worse since, based on your description above, your contract "likely" violates Texas law regarding executory contracts...and if so, you don't even want to know what the tenant can do to you financially.
Second, if your agent drafted such an agreement, the agent most certainly violated the law as well as the Code of Ethics (assuming he/she is a member of NAR) since he/she is clearly not qualified to handle such a transaction without a law license.
As stated above, you may very well be in deep poo poo so don't make it worse trying to get legal advice from non-attorney types on this site who have not read your agreement, and probably would run from it if they had. SEEK LEGAL COUNSEL ASAP!
Thanks Guy, I have spoken to an attorney, and basically the only thing to do is to try and get a release of liability on the contract and do up a new contract and follow all the guidelines. The trick now is finding out what all forms I need and what things I have to give to them and on what schedule. Any idea where that stuff is?
The words 'rent to own' and 'purchase credits' scare me. Is the $10,000 specifically called Option Consideration? I hope so. My lease and option to buy are completely separate documents and do not reference each other (or purchase credits). Was the option notarized and recorded? Better if not at this point I would think.
Yes, I would find the best RE legal counsel in your area and have them look over your docs. A breach in the lease is just that. Here I would give them a 10-day Notice to Comply. There it may be different, hence the legal advice recommendation. Good luck @David Baur !
The 10K, is listed as "Earnest Money" in the "One to Four Family Residential Contract (Resale)" document. These are all separate documents, one is a lease, BUYER'S TEMPORARY RESIDENTIAL LEASE, the other one is "One to Four Family Residential Contract (Resale)" There is also a THIRD PARTY Financing Addendum for Credit Approval contract.