Help with lease option contractdoing the paperwork correctly

Only solicitors can prepare legal documents for others such as contracts. You could do it yourself, but you are running a huge risk. Imagine if you get everything in place and then go to exercise your option only to find the otherside doesn't have to honor it because it of a gaping big loophole which you were aware of.

Hi Kerry

I've couldn't agree more with Terry.  We've been running our Vendor Finance business since 2003.  I listened to a well known educator and once did my own paperwork for a VF transaction.  As murphy's law would have it, it stuffed up and cost a lot in lawyer's fees to fix.  It happened early in our VF business and I haven't tried to do legal paperwork myself since.  What I do do though, is get the purchaser to pay for the drawing up of the paperwork.

Do what you do best, i.e. put together transactions and use your specialist professionals to make sure the paperwork has the best chance of working for you the way you want it to.

Cheers,  Paul

Hi Kerry

To provide a tenant/buyer with a lease/option you need to have:
1.  A lease that gives you the right to sub lease and
2.  An option for longer than the option you plan to provide.
Therefore completing a one page call option will not supply you with all you need.

I'd suggest you secure the property with an appropriate lease/option.  Your solicitor will be able to write up the paperwork so that you only start paying when you have a new buyer in place.  You can then take out your costs from the incoming buyer's deposit (up front option fee).

We don't do back to back lease/options anymore but, if you haven't done one of these before, I'd suggest you find an experienced VF'er in your area and offer them a share of the profit to help you through the process by way of a joint venture.  Do however check how many back to back lease/options this experienced VF'er has done before you form the JV.

They are not easy and about 50% of them fall over.

Cheers,  Paul

Hi Kerry

First up, thanks Terry, correct as usual 

Kerry, it sounds like you are talking with some people who want to sell their property and are willing to consider selling it with VF.  This situation may lend itself to a back to back lease/option but the double set of paperwork and usual short term, I find, are not as attractive to a buyer as an Instalment Contract.

May I suggest you have a look at  http://www.negative2positive.com.au  to get an idea of another strategy for this situation.  Once you've had a read of that site, feel free to give me a call.

Cheers,  Paul

Hi Terry

In relation to s149 and those documents required by section 52A (2) (a) of the Act, I believe "Part 4 Options for purchase of residential property", of the Conveyancing (Sale of Land) Regulation 2010, allows the various required documents to be attached at the date of the Option.

As you mentioned, the Contract does not come into being until it is exchanged.  As it's a new Contract at that point, I believe the vendor would be required to supply the documents required by section 52A (2) (a) of the Act with the contract, i.e. a new up to date set.

Yes, we too have had people miss the last available "exercise date".  Scary but unlike the restaurant owner we've always let our buyers buy their home.  Can you imagine how quickly the media cameras would be on our door step if we didn't 

Cheers,  Paul

Do I need a Certificate IV in Financial Services (Finance/Mortgage Broking) to do Lease/Rent/Option deals?

Hi Colin

As Terry says, you don't need a Certificate IV in Financial Services (Finance/Mortgage Broking) to offer a property with a Lease and an Option (Lease/Option, Rent To Own, Rent To Buy, etc).  Nor do you require an Australian Credit Licence (ACL).

Any future requirement to have the Cert IV would probably be part of a requirement to have an ACL to undertake Lease/Option transactions on residential real estate.

My personal opinion is that Lease/Options on residential real estate will eventually be regulated by the National Consumer Credit Protection Act.  This opinion is based on some conversations with ASIC people (off the record) and a couple of similar rulings in VCAT and QCAT on the subject.  These rulings occurred in the two Tribunals when the Chairperson of each Tribunal found out the tenant had an option on the property, as well as a Residential Lease.

With this discovery the Chairperson declared that the intent of the Lease/Option was home ownership and therefore the Lease/Option was an Instalment Contract and the matter could not be heard in the Tribunal and should go to a higher court.  In both cases the VF'er didn't take it to the higher court, i.e. they settled with the tenant/buyers.

Cheers,  Paul