Re: dumb question - Landlord Forum thread

Re: dumb question by OK-LL on November 2, 2009 @07:41

You can take an option deposit of up to 5% of the sales amount, but if you're strapped for $$, I'd put it in an escrow account. What if you have to return it to the tenant for any reason -- say the house doesn't pass inspections, doesn't qualify for lending or burns down while you're still the owner? If you're strapped, you wouldn't have the $$ to return tp tenant. I say escrow the funds until the sale consumates.

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Re: dumb question by OK-LL on November 2, 2009 @07:43

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Oh, to explain better, the 5% of the contract sales price is considered the limit of liquidated damages (damages too nebulus to specify) when a contract is broken. That's easier to support with argument in court than a larger amount, and that's the top end of what I would expect a tenant to be able to provide (you might want to collect less) -- if they had a lot of liquid cash, they'd be buying outright.