What If Something Happens To The House?

bobberth profile photo

I think I picked up here that it is a good idea to keep the Lease seperate from the Option. Let's say that I'm L/O-ing a house to a t/b for 1 year and I have a stand alone lease and a stand alone option contract. 6 months after the L/O is signed, something happens like the water heater goes out. Would I be responsible for replacing that? How would I make it so I'm not responsible for it? Maybe I'm wrong on having 2 seperate, stand alone documents when doing a L/O?

Thanks
Bob

Comments(3)

  • loanwizard22nd August, 2003

    You absolutely want to have 2 separate agreements. Depending upon the quality of your T/B, you may consider which lease agreement you have them sign. I have in my rental contracts that the tenant is responsible for the 1st $50.00 of any repair. I also have a net net lease that says the tenant is responsible for ALL repairs. That, my friend is a 2 edged sword. A marginal T/B may turn a $50.00 problem into a $2500.00 problem and then walk away from it. Whose problem is it then? So I guess the answer is, it depends on the T/B.
    [addsig]

  • LucyTheMortgageBroker22nd August, 2003

    Hi!

    I agree with loanwizard. I make the tenant responsible for the first $5000 in repairs. I really don't want them to call me. However, I don't want an implied warranty of habitability issue, either. I verbally counsel my t/b that if they have a repair that they can't cover, to call me immediately. I will get it taken care of and let them pay me back over time, if necessary. I don't ever want them to let that $50 problem go to $2500.
    [addsig]

  • EWM6923rd August, 2003

    Another method to explore would be something like this...

    In your L/O with the seller have them agree to pick up maintenance/repair over $500 in any given month. You both have a vested interest in the property not having big issues pop up once the deal is closed, right?

    In your L/O with the T/B have them agree to pay for the 1st $500 in any given month telling them that you'll see that anything over that gets taken care of.

    All you have to do from that point is supervise. Your seller knows you're serious about taking care of the property and your T/B gets to take care of the prop like it is their own (they are considering to buy it, right/).

    Happy Investing ...

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