lease to buy

5 Replies

I am planning on selling my Assisted Living Home with a "lease to buy".  What kind of lawyer would be best.  Is there anyone out there that has used this strategy?  What are the pro's and con's.   Thank you, Manitou

hello, it is advisable to hire a real estate attorney, but not 100% necessary. LAwdepot.com has contracts specialized for your state under lease with option to purchase or lease purchase contracts. of course an attorney is the best way to go, but if it is not in your budget I would totally go to the website and create a legal contract and pay $15 for a prepaid legal attorney on the website to review it. Once you have the tenant buyers sign, I would record the document through the county.

Originally posted by @Barbara Couch :

I am planning on selling my Assisted Living Home with a "lease to buy".  What kind of lawyer would be best.  Is there anyone out there that has used this strategy?  What are the pro's and con's.   Thank you, Manitou

Welcome to BP!  This is beyond the scope of most lease-option folks that deal in residential, the type of attorney can be a RE attorney, but also a corporate specialist.

If your company is being sold, name and other assets, I'd suggest a corporate attorney, if you're only selling the building, a RE attorney. Many do both too.

Dodd-Frank does not apply here, this is commercial.

What are your intentions? Are you wanting to lease it and give an option to entice a tenant to take it or are you wanting to sell, or sell with an income generated from the real estate and perhaps the business? What are you trying to accomplish?

Assisted living entities aren't generally sold to anyone off the street, you're aware of the licensing and compliance issues and your tenant/buyer will need to comply as well.

Are you including furniture and fixtures, equipment and other personal property? If so, such are better sold than leased, either way you'll be using UCC filings to secure these assets.

I'd suggest you simply sell with seller financing and use a deed of trust/mortgage, it would be much cleaner and much easier to manage.

Even under a NNN lease, you'll have liabilities, such generally have limits as to who is responsible for what.

Leasing, you could become a party to a law suit as to liability, selling and being a lien holder will clear you from such matters.

These deals often are done between parties who know each other, like an owner selling/leasing to an employee or manager type, is that what you have? Or, is this to go out on the open market to the public?

Depending on your answers, I can form a better idea of what you might need. :)

Thank you for your reply.  We are indeed helping out a couple that have worked here for years.  They know the business and have completed all things needed to become licensed in our industry.  They can not afford (or have family) to pay a down payment.  Our bank is willing to give them a first and do a second through SBA.  We will loan them a small 3rd at the time of sale.  

We do not have family that wants to take on this wonderful business and it is our intention to help this couple achieve what they would not have been able to on their own. They are going to take over our LLC (I think) and pay business expenses from the business. They bank understands that they will be paying on the lease option in order to have the amount that they need to close in approximately 5 years.

We are keeping control of the property until then.  They will be leasing the business and using any furnishings and tools that here.  We will live close by and will mentor them as this will be a win/win for both.  I wish we had their youth, but alas we are retirement age.

What is UCC and NNN ? Thank you , I will be looking for a corporate real estate lawyer.

Originally posted by @Barbara Couch :

What is UCC and NNN ? Thank you , I will be looking for a corporate real estate lawyer.

 UCC is uniform commercial code. A UCC filing is a form of security agreement. It gives you a secured interest in an asset like inventory for example. 

NNN is a Triple net lease. This means the tenant pays all expenses and taxes. In a SFH typically the owner pays for management, property taxes, insurance repairs etc. In a NNN lease the tenant pays for all those expenses. In commercial leasing it is common to do a "Triple Net" lease.

Thank you, you have been very helpful.  I don't even know what I don't know yet!  I am moving forward more cautiously and with legal representation.  Thanks again.

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