I am lease optioning a condo from a friend for investment purposes. I’d like to sublease the condo with the option to purchase…sandwich lease option, I think. Since this is my first investment and have a short period of time to find a tenant I am going through a real estate agent to list the condo. However, the agent informed me that I can only sublease the condo and not have an additional lease option contract because my name is not on the deed to the condo.
I have researched several cases where this has been done. As a newbie, I didn’t want to contradict the agent without further looking into it. Is it legal in Michigan to L/O from the seller then sublease with the option to purchase to a tenant?
thanks for the input. I would like to show the agent a legal documentation, besides my lease option contract stating a sandwich lease is legal. Do you know where I can find this?
Also, if a tenant/buyer decides to exercise the option, do I have to do the same before I can sell the condo to the tenant? Instead, does a Title Co. take care of the details without ever having my name on the deed?
How is cash flow & end profit get taxed if I never owned the condo?
Your contract should have a clause that says you are able to sublet, assign etc. to a third party.
Yes, when they the tenant/buyer decides to excercse their option, the title company should be able to do a double closing. No need for the deed to be transfered to your name. I think you are getting confused with sub2 and L/O.
See your Accountant as far as taxes go. It will depend on your situation LLC, S-corp, C-Corp etc.
It is not about legal documentation you can show this agent, it is about what the agents are allowed to do and required to do by the state statutes, board of realtors and their broker in charge.
The agent in this case requires the deed be in the persons name selling the property, should something happen since you are only leasing from this person albeit you have an option, if the seller should have a lien or encumbrance placed on them it will attach to the property, so the agent cannot in all good concience sell a property and guarantee it will close according to the original terms and conditions.
I believe you will find most agents require the deed be in the name of the person selling before they will list it.