All Forum Posts by: Kim LeJeune

Hi,

I own a Mobile Home in which I was offering a Lease Purchase to the tenant. She was on a 10 year Lease Purchase plan.  I actually just purchased it in Dec 18’ and we signed a new contract for the remainder of the note, which was 3.5 years left at the time.  She made payments by just depositing so I hardly ever saw her.  

I received a phone call from her daughter yesterday stating that her Mom had passed away a year ago and that she’s been making the deposited payments.  

I know she is not the only sibling and to my knowledge, the daughter didn’t live there before her passing (but I don’t know for sure).

Anyway, the only person in the lease is The Mother.  The is no mention in the lease about this circumstance.  It does say that the tenant cannot sublease without written permission.  Again, I had no idea about any of this until yesterday.

My questions are: 

A) Does the daughter have the legal rights to the Mobile Home and the right to take over the remainder of the term, which is about 2 years?

B) If not, how would you as a landlord handle this situation?

Thanks in advance :)

It’s not deemed a sale.  It’s a lease with the option to purchase at the end of the term. 

@Eeamonn McElroy

The lease price is in line with other FMV lease prices...definitely within 10 percent. The intent of both parties in the contract is as stated. Mine is to allow him to purchase after all payments are made and his is to purchase. If for some reason he backs out of the deal, he does lose everything he's put in. Does this help?

@Michael Plaks Thanks for the advice.  Which form would this be claimed on?  

Also, curious as to what difference it makes if one would be living in the home prior.  What does return of principal mean?  Does the mean that the amount that I’ve invested in the house can be paid back without being taxed?   Technically, if that is the case, I wouldn’t be profitable until several years down the line.  

Hi,

I have a house that is owned fully by me (no mortgage) that I created a lease option on with a lessee. The FMV is about 165k. I received a 15k down payment and am receiving monthly payments of $1578 for so many years. I pay the insurance. In the paperwork, I show that the lessee receives a small credit towards the purchase price. The credit per month increases over time...a type of amortization if you will. At the end of his lease, it will be paid on and he can "buy it". Can anybody advise me on how to treat this for tax purposes? If I've made mistakes with the structuring of this, please go easy on me, but if you have tips for next time, please do advise. I'm mainly concerned right now with how to handle this with my taxes. Thanks in advance.