I’ve recently seen an instance where a Seller gladly accepted an Early Occupancy Agreement within a Lease/Purchase framework. The Seller thought to themselves, “Great, even if the Lease Purchase/Temporary Occupancy Agreement did not work out (in the vast majority of instances, they do not because the tenant/Buyer never improves their credit scores in order to get loan approval along with a host of other issues), then I’ll at least have a rental income to pay my mortgage, etc.”
In spite of being cautioned about the downside risks associated with Lease/Purchase Agreements (see previous Blog articles), this Seller, like many others are prone to do, rolled the dice in hopes that all would work out. Unfortunately, it did not work out and reality hit…and hit hard!
A “red flag” immediately went up when the tenant stopped paying their rent and was non responsive to the multiple attempts by the landlord to get the tenant caught up with the agreed upon rental payments. What happened next was that Law Enforcement Officers (police, including S.W.A.T. team members) were breaking into this house with subpoena in hand because of the reasonable cause to suspect that large amounts of illegal drugs were being sold at this residence. Unfortunately for the Seller, damage was done to the property by the tenant and the police which now forces the Seller to spend additional monies to go to court to seek economic remedy over this matter.
Incidentally, the police found a considerable amount of “pot” on the premises as well as confiscating over $100,000 in cash! Fortunately for the Seller, what would have been even worse is if their residence had been turned into a highly toxic meth lab. Had that been the case, the entire house may have been required to be razed. The fine print contained in many Homeowner Insurance policies may even exclude such claims for property damage.
Again, if you are a Seller considering a Lease/Purchase in Middle Tennessee, do your due diligence on prospective Renters/Purchasers. Even then, know the risks that you are taking in such Agreements. Have an experienced Principal Broker like me to guide you through complicated real estate proceedings such as what is described in the foregoing.
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