Sub-lease/option "Worst Case Scenario"
I am going to sign a L/O this week and I have about 50 days before I owe him a payment. My question is what if I cannot sell or sub l/o in that 50 days and I dont make a $1200 payment, what is my worst case scenario?
Can my credit be effected? Sued? etc.
Thanks,
Jorgan Cattin
Stick this little clause into your lease agreement: "Payments to commence upon Tenant/Buyer procuring a suitable subtenant or assignee." Then you don't have to worry about it. If they give you any crap about it just tell them: "Hey, look retard. If you list your house with a Realtor are they going to make your payment until it sells? Then why should I?" I told one guy this and man did he have a stupid look on his face. I almost busted up laughing.
Also, you can always use a weasel clause such as "partner approval" or "suitable inspection" or something like that to get out of the deal. I don't like to do those and usually you don't have to. With 50 days you should be able to find someone.
By the way, if I remember right you said you were 17. Good job on finding a deal at that age. I'm 22 and get a lot of crap (and lose a lot of deals) because people think I'm too young. Keep up the good work.
Peace,
Mitchell
PS. No it can't hurt your credit because no one is reporting it (plus your 17 and you probably don't have any to begin with). Also, yes you can get sued. You would probably win, but yes you can always get sued. Remember, this is a litigation society. Americans love to sue people but I would worry about it. Also, etc. can happen too. Remember Murphy's Law. Have fun!
Hey,
Good luck getting those clauses that KingMonkey recommends in the contract.
As to your questions about credit: YES it can be appear on your credit. I have reported several tenants in the past. It was extremely easy and cost me nothing. So if you piss off the wrong landlord, expect it to show up.
Can you get sued? Hell yes. Again, I have sued two tenants. Both in small claims court, so I think it cost me $50, but I might be wrong. In BOTH cases, I won. Collecting on the judgement is very difficult and I have yet to see a dime, but that is not the point. And just to finish the story, I have had one tenant arrested for writing me a bad check.
BUT that is NOT the worst thing that can happen to you. The worst is you get a bad tenant and they tear the house apart and stop making rent payments to you.
Quote:Stick this little clause into your lease agreement: "Payments to commence upon Tenant/Buyer procuring a suitable subtenant or assignee." Then you don't have to worry about it. If they give you any crap about it just tell them: "Hey, look retard. If you list your house with a Realtor are they going to make your payment until it sells?kingmonkey,
I guess my response would be:
"If I wanted to hire a property manager, I wouldn't be talking to you.
If you can't pay your rent from the first day of your lease, what confidence do you give me that you will pay the rent when your sub-tenant quits paying?
I am not renting this property to your sub-tenant, I am renting to you. You are the one that i will sue for damages to the property. You are the one that I will take to the eviction hearing if the rent is not paid. If you can't pay the rent, then you need to look somewhere else. First month's rent and security deposit is due at lease signing."
Playing devil's advocate for a sec here...you should ALWAYS have a "weasel clause" in your documents, for the simple fact that if something does go wrong, an act of God or something you will have a way to get out. It's not about being immoral or doing something wrong, it's about protecting your butt.
You only get into a deal that you know you can handle, 99% of the time, you should have a list of people looking for stuff and then you go and find the homes...which is my opinion is easier to do. But if you can't do that, then just make sure you know your area and how soon you can turn something around.
In every lease-option transaction I make it clear to the seller that if I can't find someone within 30-60 days (whatever they agree to) then they haven't lost anything and didn't have to pay a listing fee, etc. That way, they are not surprised when you call and let them know that you haven't found someone.
Don't worry about getting deals done...I know you what to get them done quick...just worry about getting them done right, because they will sue you and it will suck. :-o
Best,
[addsig]
Can you even sign a legal binding contract at the age of 17?
No at age 17 I cannot sign a legally binding contract, check my profile an look at another post about this deal. I am having a good friend sign all the legal papers.
Thanks,
Jorgan
First off, I've never not paid by the rent by the time it was due. I believe there should some kind of protection for you if you can't find a buyer. Everyone uses a weasel clause. I don't like to use them and I never have because I've always been able to find a tenant before the first rent was due. HOWEVER, I'll be damned if I don't give myself an out.
I don't bill myself as a "saving grace" that can cure all of their problems. I tell them up front, this is what I do. I find people to buy your house via lease option. I will try to find someone to put into your house by the end of the month. I also tell them that 99% of the time I have a tenant within a few weeks, which is true. I don't even require them to delist their house with the Realtor. That's how I get around this situation.
It works this way: "Keep your house listed with the Realtor. If they find a buyer before me, give me back my $10 and we'll part ways. If I find someone before them, you unlist your house and we go from there." Most people are cool with this because it gives them hope that it will be done. It's not going to hurt them any if it doesn't happen.
Now, what if I can't find someone? Hasn't happened yet but more than likely I'll just pay the rent and keep going. I haven't had anyone, save one person, give me any crap about that clause. Most understand. Do what works for you.
Peace,
Mitchell[ Edited by kingmonkey on Date 04/29/2004 ]
Jorgan,
Go do it I know you can. Just get out and hustle the street. Besides you have a really smart atty put him to work if and when.
By the way did the other Container types get ahold of you I gave you a great build up. You might decide to gather the groups together and present a more united front. YOu have a hell of a market up there. Damn man 17 is old. I was flying fighters in the RAF at 16, so you are a little older. Besides you have a good war chest, dip in for a months rent if necessary. With 250,000 you will never miss it.
Go fer it. Lucius
Lucius:
Yes, I have been in corespondence with Joel Egan of Seattle. He has formed "Team Hybrid". Joel wants me to meet with his team sometime this month to discuss my involvement with the team, the essential goal of the team is to rebuild the Elliott Bay waterfront portion of downtown Seattle a 3.5 mile strech with mixed use containers.
How is everything down in Lala land, with your project?
Best wishes,
Jorgan Cattin