Lease 2 Purchase Contract questions...

**A Drunken Theory** · 06-22-2009, 12:13 PM

Hello,

I have a property that I am currently trying to sell. There is an uninhabitable house on the property, and consequently cannot get insurance on the house until it's up to code.

I recently received a phone call from a gentleman wanting to do a Lease 2 Purchase agreement. He mentioned that he's a contractor and can do repairs himself.

Is this typical? Can I even do this? Should I consider this option?

Do I need insurance on the property, or will that be up to the Buyers/Tenants to deal with once they've made the necessary repairs and are ready to move in?

Should I compensate the Buyers/Tenants on the final purchase cost for repairs only, and not a percentage of rent?

Anything else I should consider?

Thank you in advanced for any advice.

**RedCarpetSchool** · 06-22-2009, 04:23 PM

Read through the lease carefully, anyone can call themselves a contractor. Ask for his contracting license number if he has one.

Things to add to the lease.
Provide proper insurance on the property and for himself as a contractor doing the work.
Have the property if in default returned to its current condition. Its one thing to get the property back if he defaults its another if the property is in worse shape than when he started.
[FONT=Calibri][SIZE=3]Non refundable cash down. And month payments or some other trade for you

**Hollywood Landlord** · 07-15-2009, 10:23 AM

You will absolutely want homeowner's insurance on the property until the property goes into his hands as the new owner.

Yes, make sure he has a contractor's license and is insured for his business (you want to ask him for a copy of his liability insurance to see how much he is covered for should he wreck anything on your property) and if you do decide to rent to him and he is going to work on the property, make sure his insurance lists you as one of the insured on HIS insurance. This is easy and will cost him nothing, but it protects you.

As for the compensation for work done, you can work that out however it is mutually beneficial... he could bid the project out for a lump sum which you could do as partial rent deduction or take the full thing out of the sales price when all the work is done satisfactorily.

And, I agree with Red Carpet...

1) Take a decent sized down payment that is non-refundable

2) Have a lawyer check out your agreement.

This is very doable if you are thorough in your preparations.