Hi I’m new to all of this,
I saw an ad where a unit was for sale showing a sale price and it included in the details 5 year lease, 2×5 year options what does this actually mean?
Any assistance greatly appreciated
Regards
BrianBrian,
Welcome to the forum. I’m pretty new myself so here we are….
I’ll have a stab and say that you have yourself a 5 year lease, with 2, 5 year options. That means at the end of the 5 year lease, the Lessee (tenant) has the right – but not obligated – to extend the lease for a further 5 years at some pre-determined terms and conditions (T&C’s), then again 5 years hence.
You as the potential Lessor (Landlord) really have only the enforceable 5 year lease. Six months before the 5 yr lease is up you typically write to the Lessee and formally ask them whether they intend taking up the option or not. If they do – usually, if the T&C’s are good – happy days….if not…get looking for a new Lessee.
That is, if the Lessee doesn’t want to take it up, the 2 x 5yr option ain’t worth squat.
Many CIP and IIP are advertised with these enormous trailing options, which are not legally enforceable for the Lessor and therefore you should not pay anything extra for them….I believe banks don’t place any weight on them.
Hope that helps.
Cheers,
Dazzling
“Go hard or go home”
Hi Brian-and welcome
Dazzling is pretty much on the mark. A lease is only as good as the tenant so it wouldn’t hurt to find out how long he has been there and if there have been any problems during that time (eg arrears of rent). If things are sweet and he has been in occupancy for a while, hopefully things will stay good. If there are problems and he doesn’t pay (and then refuses to go) you may find yourself up for more money to try and kick him out. Hope that isn’t the case hear.
Also remember the other side of the coin with tenants under a lease, if he complies with the terms of the lease you MUST keep him on as a tenant at the agreed rental. You can’t even try and remove him if you get a better offer (or for any other reason) because he has a right to be there. If he exercises his options to extend (and there has been no defaults) you are obliged to extend in accordance with the options.
Good tenants are great-bad tenants are a great pain in the….
markk
Happy Hunting
http://www.kentscollections.comHi Brian61
The lease options can be on a use it or lose it basis, where the lessee must advise the landlord in writing giving (e.g.) 6 months notice of their intention and committment to take up the option, or to be allowing the lease to lapse, which gives the landlord time to find another tenant. Include the access rights to show prospective replacement tenants through the property. Different solicitors have different commercial leases, some are poorly worded and flawed, read them carefully.
just a few thoughts.
cheers, good luck [biggrin]
thecrestthecrest | Tony Neale - Statewide Motel Brokers
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Sorry But the advice you have been given so far may have holes in it.
You need to consult the state laws relating to tenancies.There may be significant variations between statesWhat you are describing sounds like a commercial lease.
Call your states Real Estate Agents Institute for *free* adviceCarr,
You also see these a fair bit with government and defence housing contracts. Have seen many 3x3x3 leases but also do get 5x5x5. Commercial is more common though!
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