Ok here is my problem I have a Condo that appraised for 184K in 2005. I now have a TB who wants to exercise his option…so we went back and forth on price because there are other condos in the area for sale and he is a mortgage broker. Well anyways the appraisal I had done today came in at 176K. Now in the past I would just lower my price if I real wanted to do the sale. The problem here is the current owner’s mortgage has a payoff of 179K…So what are my option…just to let everyone know the TB has been late on his rent once ore twice so it null and voids the PS contract. I think this might me my only out. Any help would be great.
If you accepted late payments and allowed him to stay there without any consequences, your only out is not an out at all. You don’t say whether you had a predetermined sale price or if your tenant was to buy you out at FMV. ???
I did accept late payments along with late fees, but according to the PS contract it becomes null & void if the t/b violates any part of the rental agreement. AS for the purchase price it was approximate.
In my opinion, your acceptance of late payments negated the null and void option available to you. You are too late. This illustrates why contracts are so important. When selling a property at a future date, you either have a predetermined sale price, or you are going to sell at Fair Market Value, NEVER an approximate value. Your best bet is to convince your buyer to extend the lease term until the property appreciates. He probably won’t agree to this. Next, try to convince him to assume the existing mortgage.
I would always use a preset price to avoid this. At lease signing he’s agreeing that its a fair price and if at the end of the term he wants to walk away from his option money due to current market conditions its his call. Haggling over price at the end of the term is for the birds. Also, keep in mind your price should be set a little on the high side due to the risk as most T/Bs are credit challanged, hence why he’s in a LP to begin with. If it were me and the market value at lease signing was $184k I would have gone a little over that, maybe $189k and set it in stone…then when the lease is over he can decide if he still wants to buy or walk away from his option money.
Ps- I’m assuming this is a sandwich lease and you’re in the middle? How much time do you have left on your lease with the buyer? Enough to signup another T/B?