Can You Evict A T/B If They Have Equity Interest In The Property?
When you do a L/O and take an option payment from a T/B, don't they then have an equity interest in the property. If this is true, how can you evict someone when they stop making the monthly payments since they have an equity interest in the property.
Thanks
Housebyr
People are evicted everyday who own their house free and clear. Back taxes are an example. A tenant who has an option to purchase can be evicted if they are behind on the payments. I gave my people a 60 day clause in my documents and if they got 2 payments behind I would send them notice that I was starting eviction process which in Texas was a 3 day notice to vacate followed by actions and usually ending up in court. Most got caught up with the payments before eviction got too far down the road. The more money they have as a down payment on the option the more you should work with them especially since it is hard to find new tenants/buyers today. Hope i helped a little
Ted Jr
housebyr,
You have two separate issues here. The Tenant or Leasee and the Buyer option consideration.
I will speak what happens in my state as all states have different laws.
You go to evict the Tenant in Justice Court, the Tenant changes hats and says I am also the Buyer. I have put down option money therefore I have an equity interest in the property.
The Judge says you are in the wrong court you need to be in District Court because of the equity issue. Now you are faced with a Judicial Foreclosure rather than an eviction.
This can happen if your T/B is aware of the equity issue, most are not, but there are ones who are.
John $Cash$ Locke
Peolpe do like running to a lawyer these days. Rite now a happen to have two buyers that know lawyers. It's getting to the point were I think "knowing a lawyer" is more important to them then buying a house with shot credit.[ Edited by DavidBrowne on Date 09/03/2003 ]
This is why you need 2 separate agreements for a Lease option. I am not an attorney, and judges sometimes do funny (not humorous) things. But, if you have 2 separate agreements you are safer. In one agreement, you have the lease, with all the contractual obligations of both parties. It should never have any reference to the option, or rent credits. This is the document that if they don't pay, you evict upon. The 2nd document is the option document. It is in this document where you specify that the consideration is for the option to purchase the property for a specific value within a certain period of time. You also should have some verbiage in this document that specifies that if the optionee defaults on the separate lease agreement, that the option consideration is forfeited and all rent credits as well. When you go to court for an eviction proceeding, it should be for non payment of rent period. If they bring up the separate agreement, you should be quick to point out that those particular proceedings are for the lease only. After alll, you are the one that filed. If they have a problem with the other agreement, then they should have to file a separate action. Additionally you should have a 3rd document, typically an 8 1/2 by 11 sheet of paper that has in list form,
1. The tenant agrees that the option price is XXXXX
2. The tenant agrees that if the lease is broken that the option consideration and any rent credits are forfeited.
3. The tenant agrees that if the option is not excercised, that the option consideration as well as any rent credits are forfeited.
4. the tenant agrees that in the case of a lawsuit, to pay all costs involved.
Etc....
[addsig]
Would also agree that a performing mortgage be signed and recorded?
This is not rocket science people, don't try to make it harder than it needs to be.
As Shawn pointed out, a L/O is really to separate contracts or deals. They DON'T have to go together.
A lease is a long-term rental agreement. In it, you would normally put down the security deposit amount, monthly payment amount, and the conditions/remedies for default/eviction. DO NOT have any thing within this document referring to the option contract.
An option to purchase is a contract the gives the buyer/optionee the choice, but not the obligation, to sign a purchase agreement on a particular piece of property within a certain period of time.
In addition to the lease agreement and the option agreement, I would do as Shawn recommended and create a third, CYA, document.
Roger