Expert: Karyn Foley - 9/14/2007

Question
We have a home that we wanted to sell.  We allowed renters in to build their credit for purchase.  They still are not ready to purchase but have been on time with their rent.  The rent is a substantial amount.  The home is 4 years old and they take care excellent care of the home.  Do you have any suggestions that could either help them to get in the home or help us to locate investors that would be willing to allow them to continue to rent.  We don't want to put it on the market for straight buyers, because we don't want to leave them homeless.  

Any suggestions?

Thank you.

Answer
Dear Carol:  In today's buyers market you may indeed find some one who will purchase your home subject to the lease.  That means that they must allow the existing tenant to remain in the home for the duration of the lease, and furthermore, the new owner must abide by any rent control laws or tenant laws in your city.  The problem may be that your tenants may not allow a potential buyer access to the home, or be reasonably cooperative.  Also, you should check with a mortgage broker to confirm that investor lending may be at a higher interest rate.  If you wish your tenants to buy your home, introduce them to the mortgage broker.  Or, consider carrying a first trust deed which may be scary for you.  I would speak with a lender or real estate attorney and know any dangers or caveats you should explore as it could be costly and time consuming for your to take back the home should the tenant/buyers default.  It would be imperatived that you do a complete check of their credit, employment, and other details that would confirm or deny their desirability as some one who would be able to pay you enough and on a regular basis.  If you go this route, for your own sake, hire a real estate attorney - or - at the very least, a real estate broker who would do the paperwork for you and advise and be held responsible and accountable.  There are also lots of disclosure items for which you are held accountable as a seller, wno matter to whom you sell the property.  It is not worth doing all of this without substantial support from an expert.  It would be worth the money to keep yourselves out of trouble and out of court.  I have seen many foreclosures happen, and it is traumatic when it happens to an individual rather than a bank.  Why are you so concerned about your tenants being homeless?  In todays tough to sell market, many for sale homes are turning into for rent homes.  You must do for yourselves what is best for yourselves.  Your needs come before your tenant's needs as they will consider themselves before they consider you.  This is a business decision so seek professional advise and support, and keep objective.  Do not let emotions rule your head. Let me know what happens and if I can answer any other questions.  Karyn Foley