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Updated about 10 years ago on . Most recent reply

User Stats

367
Posts
189
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Jeff G.
  • Investor
  • Wethersfield, CT
189
Votes |
367
Posts

Lease Options, Subject-To, and Repairs

Jeff G.
  • Investor
  • Wethersfield, CT
Posted

So, back in the day before the (in my view wholly unnecessary) Dodd-Frank Safe Act it was common to perform a lease option as follows:

  • Large "option payment" as a faux down-payment.
  • Charge well above market rent
  • Provide generous rent-credits based upon the performance of the tenant-buyer.
  • Make the tenant-buyer pay for repairs below (say) $500.
  • In the case of a Subject-To deal the prior owner might be contractually on the hook for repairs above $500.

I realize Dodd Fank changed much of that. I have a partial grasp of what has changed: within market rent only, capped option payments, rent credits are by decree now magically redefined as a security, etc.

My question is: having done some reading I've gotten the general impression that requiring the tenant-buyer to do repairs that traditionally fall to the landlord also violates the act. Is this understanding accurate?

I realize few of you are lawyers, and those that are aren't my lawyer, and so forth. Any clarification on this point is welcome.

  • Jeff G.
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