Hi, I have sold one of my investment properties on vendor finance.
I have a question about water rates that I hope more experienced wrappers can help me with.When I sell a house with vendor finance, I pay for the water rates, council rates, and building insurance and the purchaser pays me back for that by weekly instalments on top of their mortgage repayment to me.
This will work fine if the purchaser lives in the property, but my purchaser has rented the property to tenants: Paying the council rates and insurance is not a problem, but how is the water rates paid?
The real estate agent who is managing the property says it is not possible for me to pay the water rates and then have the tenant pay the water usage. He said it’s either I or the purchaser pay for ALL of the water bill (water rates and usage).
The purchaser shouldn’t pay for all of it as the purchaser is already paying me the water rates per week.
I shouldn’t pay for it because I risk not being reimbursed the water usage from the tenant.It would be a lot easier if the water company can charge the water rates and water usage in separate invoices.
What do the more experienced wrappers do in this case?
Much appreciated.
Best regards,
Joe.
What more experienced wrappers do is not include a clause in the installment contract allowing the purchaser to rent out the property. Think that course of action is fraut with danger.
Richard Taylor | Australia's leading private lender
Hi Joe
Just as an aside, all our Instalment Sales Contracts don't allow our Wrapees to rent the property. The clause goes something like "the purchaser must remain in possession of the property".
One of our reason for not allowing our wrapees to rent the proerty isthat we feel there is too much "distance" between us and the people living in the property.
At this point, if I was you, I'd back right away from this "who pays what" situation. In your Instalement Sales Contract I'd imagine it says that your wrapees are responsible for the water rates. I would simply let the wrapees know that this has nothing to do with me and that they need to sort out a resolution to this challenge, i.e. from my point of view, it's not my problem. Good luck.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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