Jan. 9, 2008
Dear George: I'm interested in entering a rent-to-own agreement; I'll rent for two years with an option to purchase. Are these types of deals permitted?
Answer: A lease coupled with any option to purchase that lasts longer than 180 days is by definition the same as a contract for deed. There are onerous requirements and penalties on the seller if there are any mistakes in handling certain accounting issues, defaults, and foreclosures. It's far too risky for owners to use this type of agreement. It's far easier to seller finance and avoid all of the new statutory pitfalls. Since you are a potential buyer, you are depending on the seller to be willing to take an ill-advised risk, most probably without his informed consent. It would be better for the seller to owner-finance.
Dear George: I entered into a contract to buy a house, and an amendment for repairs was executed by both parties. Box 4A(1) on the TREC contract states: "If the property does not satisfy the lenders' underwriting requirements for the loan(s), this contract will terminate and the earnest money will be refunded to the buyer." There was no request to extend the closing date for the repairs, and the sellers did not complete the repairs before the closing date. The lender terminated the loan/contract, citing in section 1F "property unacceptable" and "repairs incomplete." Since the seller defaulted and compromised my loan, am I obligated to enter a new contract the day after close? The seller completed the repairs on the day of contracted close, rather than prior as stated in the contract. The sellers insist that I must enter a new contract because, after all, they did finish the repairs. Can they force me to renegotiate the contract?
Answer: If you want to purchase the property, you can enter into a new or amended contract; however, no one can force you to to do so. If you decide not to purchase the property, paragraph 4A(1) of the contract is applicable, and the earnest money must be refunded to the buyer. However, the title company holding the earnest money may require a return-of-earnest-money form be signed by the sellers, you, and any real estate agents involved.
Dear George: When you close on your house, how many days do you have to move out?
Answer: It's a bad idea to remain in the conveyed property beyond the date to which you've agreed by contract. A whole new series of laws takes over after closing with a "holdover tenant" (a seller who has remained in the premises after closing without a written agreement to do so), and the new owner has a legal right to evict the seller.
Dear George: I'm selling my house on my own. A buyer's inspector mentioned several items in need of repair without much evidence to support his claims. His report completely scared the potential buyer. Should I sue him?
Answer: A lawsuit isn't a good way to resolve your situation. The inspector is hired by the buyer, not you. His duty is to the buyer. If his report scared off the buyer, hire your own inspector to provide a report concerning the condition of your property. You may find that there are some issues that require repair. Of course, if you wish to file a complaint against the inspector you can do so at TREC's Web site.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.
