Has anybody ever done a “Rent To Own’ or “Option’ deal in a unit complex & had to continue paying management fees? We are under an existing management agreement of 9% but want to sell via Rent To Own. We also hired the onsite managers to sell the unit & are under an obligation to pay them commission of the sale price – thinking this is going to get messy, especially since we were the ones who have found the buyer (or lesser).
You pay the management fees to an agent managing the property usually. I guess if you still need them then you will need to pay the fee.
If you entered into an agreement to sell the property often there are clauses which mean you have to give them a commission even if you find you own buyer or another agent sells it. I think in Victoria it is standard on the contracts down there to have to pay a commission even if an option was sold on the property – you should have struck this out before you signed.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
Thanks for that. They’re quite good actually. Just wanted to know what was the norm. We don’t want to cut them out – they’ve certainly done their fair share of work. However, initially we were going to sell normally, hence the normal commission. With rent to own, unless they exercise their option, there is no lump payment to pay them with. – or should we offer to pay them if the lesser takes the option down the track? Your thoughts?
Also, would we pay the 9% monthly commission on the total amount of the rent to buy sum or just on the the amount of rent (not the extra part used to pay down the total amount owing). We think it seems fair to just pay on the rental amount….?
FYI we are in Qld.Hi Jeff
I think it all depends on what agreements you have signed. Personally I wouldn't like paying an agent a commission if they didn't find the buyer, and you have only sold an option – what happens if you pay the agent and then the buyer doesn't take up the option? You could be at a loss.
I would think any managments fees would be payable on the full rent, but you could agree otherwise.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Jeff Sally
Are you using a specialist Vendor Finance solicitor to, at a minimum, look over your lease and option documentation? We always use the services of one of these specialists to cover our position in each transaction.
The reason I ask is, if you are using such a specialist and he/she hasn't told you how to apportion your incoming funds correctly, then find another solicitor. If you aren't using the services of such a specialist solicitor, my suggestion would be to contact one asap. He/she will get you sorted out on this point quickly and can check out the rest of you paperwork at the same time.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul
Yes, we have a solicitor lined up – we are still negotiating whether it will be a wrap or an option. Seemingly at this point the solicitor wont talk anymore to us until we put $1,500 into their account. Any recommendations for a solicitor?
Hi Terry
Yes I think we need to negotiate with the onsite managers how to work this. They have offered a reduction in the commission if we are the ones who find the buyer – you’re right about the option not being exercised. Will take this into consideration. Thanks.
Hi Jeff Sally
We use Tom Forster for all our Qld vendor finance transactions. He can be contacted at 0428 777 007.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks Paul.
Is that Vendor Finance Law?
Looking like we will be going with the L/O. The onsite managers stand to lose their commission as well as the unit from their rental pool. We have found the buyer, are doing all the qualifying & maintenance, paying for the legalities & also do not require a 3rd party to manage the unit going forward.
They are already getting “less friendly”.Legally we are ok to leave them with nothing… but doesn’t seem right morally… have you guys been in a situation like this before???
Hi Jeff Sally
Tom's firm is Litigation Law.
My view on your situation is that you were more than generous, giving the on site managers the opportunity to sell the property. They didn't get a sale so I wouldn't pay them a commission, just as I wouldn't pay a real estate agent a commission, if they didn't get a sale. As far as I see it, the on site managers should be very gratefull that you're leaving the property in their rental pool.
When you speak with someone like Tom, you will learn about lease payments and ongoing option fees. It would be a shame to see the on site managers taking 9% of your on going option fee
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul
Think we need to chat with Tom as you say. We are thinking we have gotten emotional with them & are not being smart. For sure they wouldn’t do the same for us.
Think we will avoid getting personal with onsite managers, or better still avoid them altogether with our future endeavours.
You’re right – we have been more than fair, giving them the opportunity to sell our place.
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