The LPA Newsletter
September 2006
Dear Fellow Landlord,
The other day, I met a fellow landlord while in a long line at Home Depot. He was a talkative kind of guy who told me all his landlord problems. I listened and offered him some tips while the line slowly inched up. Then as I was about to recommend The LPA website, he surprised me. He told me he found a website that is helping him with the management of his ten rental homes. He gave me the address www.The LPA com ! and suggested I subscribe to the free newsletter. If you are wondering, I did introduce myself and thanked him. He is thinking about submitting his Landord of the Month profile to share with us.
In this newsletter:
An informative article by Real Estate Attorney and Author William Bronchick, "Lease/Option vs. Contract for Deed"
Free Form download in MS Word and PDF of our Lease Co-signer Agreement
Landlord Do's & Don'ts
Recent Tenant Excuses
Please e-mail us if you have any questions or would like to add or share any material / information. Have a great month.
John Nuzzolese
John@theLPA.com
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Lease/Option vs. Contract for Deed
by Attorney William BronchickLegalwiz.com
Many investors are generally familiar with the concepts lease option and contract for deed (aka "installment land contract"). Many investors confuse the two, and this article will help you understand the tax, legal, and practical issues between the two.
Lease Options
First, let's start with the lease option, which is really two things, a lease and a purchase option. A lease is a contract for the use and possession of land, creating a landlord/tenant (or "lessor/lessee") relationship.
A purchase option is a unilateral agreement wherein the optionor ("seller") agrees to give the optionee ("buyer") the exclusive right to the purchase the leased premises. The option price is generally set at a fixed price at the inception of the lease, although it does not have to be. At any time during the option period (which generally corresponds to the lease period), the tenant can exercise his option to purchase.
An option is not the same as a regular purchase contract, which is a bilateral agreement. A bilateral contract legally binds both parties to the agreement, whereas an option only binds the seller. An optionee is not bound to buy; it is his option do so (or not to do so).
A lease with option arrangement is not a sale, but rather a landlord–tenant relationship. In rare cases, a court may re–characterize the transaction as a sale if it looks like a sale. Furthermore, the IRS does not classify a lease option as a sale until the option is exercised (see, Tax Court Memorandum 1999–11).
Contract for Deed
A contract for deed (aka "installment land contract") is an agreement wherein the buyer makes installment payments on an arrangement similar to an automobile financing. The seller holds legal title to the property as security for payment, while the buyer has "equitable" title. When the buyer pays the full amount due under the contract, the seller delivers legal title to the buyer....
click for the full article...
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Free Download for LPA Newsletter subscribers.
 Lease Co-signer Agreement
This Free Download has expired.
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The Lease Co-signer agreement may be required in a case when the prospective tenant's references or credit is not satisfactory
for the landlord or agent. If you feel there are no better prospective tenants to select, the Lease Co-signer Agreement will make an additional
party responsible for the tenant's performance on the lease. You MUST fully check out and credit-qualify the co-signer with an
application (preferably an LPA Rental Application) as you would the tenant.
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Landlord Do's & Don'ts
After the Tenant has Moved
What The LPA says you should do and shouldn't do:
DO wait until the tenant has moved completely out before returning any deposit money.
DON'T have a "walkthrough" with the tenant before moveout to determine the condition of the rental. Tenants like to do this to reassure themselves that they will get all their security deposit back. Instead of calling it a "walk-through", I like to call it the "AMBUSH" because that's really how it is when you are put on the spot. The tenant is still in possession of the rental and is insisting on getting the full deposit back.
DO Obtain the tenant's forwarding address to send any security refunds or bills.
DON'T allow the tenant to leave without first giving you a forwarding address. We usually obtain this with the Tenant's Notice to Vacate form.
DO Prepare a Security Settlement Statement to send to the tenant as soon as you've assessed the condition of the property and charges against the security deposit.
DON'T wait until the tenant calls you demanding the return of the security deposit before sending your prepared settlement package.
DO be prepared with your Security Settlement Challenge Crusher letter in case the tenant wants to try to persue the deposit money.
DON'T feel you have to keep explaining the findings to a tenant who doesn't agree with the written settlement.
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Tenant Excuses
"I am out of town and can't get to a bank. My dog had a heart attack and I have to stay with him here while he has surgery. I will be gone for 8 to 10 days and will try to get you the rent when I get back."
This rent was 3 weeks late. I thought that she was original if nothing else. - April Robinson, Canada
"You can wait cause you are so cheap you haven't done a thing in here since we moved in 6 months ago!"
She moved in to a brand new beautiful apartment complete with everything. They have been complaining because they burned out some lightbulbs and want me to change them because they don't have a ladder to reach them. - Michael K., San Diego, CA
"My boyfriend is a landlord too. He told me not to pay another dime unless you lower the rent to a reasonable amount."
Her boyfriend is a sloppy know it all hippie. Maybe she can go rent from him because I'm about to send a notice to pay or quit. - Sally B., Massapequa, NY
"My husband's car burned up on the highway. The rent was in the car. It was cash."
I was almost a believer and then she said it was cash. They have never had the rent in full and in cash before. - Madge R., SW FL
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Quotations...
"Purpose, Passion and Desire cannot be achieved or acquired by deceit." - Dan Auito
"Coincidence is God's way of remaining anonymous" -Goethe
"There is no failure. Only feedback." - Robert G. Allen
A Way of Being
- Gary Link, Attorney at Law
"How much did your last tenant problem cost you?"
- John Nuzzolese
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Books by LPA Members
The Landlord Protection Agency is proud to promote the following landlord books written by LPA Members, Timothy Spangler, Tony & Sandy Midea and Dan Auito. Just click on the book for more information about it.
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