Rent to own?

**Pulaski** · 04-03-2009, 04:46 PM

Hi. I'm buying a condo in the NYC area, and I've come across a situation that has made me very uncomfortable. I'd appreciate any advice you have.

I put down an offer that was accepted for a newly constructed condo in a 12-unit building about a month ago. However, I am not yet in contract. We were expecting to close at the end of this month. But since it's new construction, the state is taking 3-4 months longer than anticipated to create the deeds and allow the developer to sell each unit as a condominium. We have to wait for the state's approval before we can enter contract (The state has given preliminary approval, but I'm told that the paperwork will take a while).

The broker has offered to rent the place to me so I can move in at the originally planned date at a rate that I consider to be above-market, but they'll give me 30% back once we close (I'm trying to negotiate a lower rent).

I told the broker that I don't feel comfortable with that arrangement, and he said that if I don't agree to rent the place he will give it to one of the other people who made an offer. I don't know if he's bluffing or not, but the very fact that he's twisting my arm like that really makes me angry. I love this place, but I'm considering walking away because I'm not sure if I want to do business with him.

Is this a common scenario? If I do rent, how can I be assured that the developer won't decide to not sell the units and just rent them, leaving me paying a high rent without ever hoping to get and of it back?

Thanks!

**Chrisopher Moltisanti** · 04-07-2009, 07:06 AM

Is it common for a developer to rent the place out before the area is completed? Don't know but if I were a developer and met someone like yourself, I'd offer to rent out the place, especially if I knew you loved it so much. The 30% he's offering to return to you, doesn't sound that bad. Plus if he's not requiring anything down at the time of purchase, think about it for a minute.

No matter what happens, you have several choices at this point man.
1) Trust the guy and give him the rent hoping he won't reneg.
2) Draw up a contract that states the terms he offered and deal with that.
3) Draw up a contract that's mutually beneficial (your wanting to pay him less in other words, so put what you feel is fair rent and % back, follow?).
4) Live elsewhere until the area's completed and get pre-approved for the purchase price between now and then.
5) Move elsewhere and don't look back.

Me personally? #3 or #5. No, you don't need to spend thousands of dollars to have a contract drawn up. Some lawyers (if you really want to go there) for $100 cash will review a contract that YOU drew up and they'll give you their brief opinion as to whether it will fullfill your goal.
If you make the deal mutually beneficial, you're increasing your chances of renting the place like you want/getting what you want. Follow?

Good luck and draw up that contract!

CM

**Greg** · 04-08-2009, 07:14 AM

Whenever you get the gut feeling that something is wrong, go with the feeling and walk away. This developer is not performing as promised and now is trying to back you into a corner.

There are plenty of properties for sale, it won't be hard to find another one.

One thing to take note of is the new regulations which just recently came into place regarding condo loans. Talk to your lender. You might not be able to get financing on this project because it is new..