LEASE/PURCHASES AND RENTALS

What Realtors® Need To Know

Steve Byrd, Carolina Multiple Listing Services, Inc. (CMLS)

H. Frazier Wallace II, Esq., Doyle & Wallace, PLLC

Stephanie Gossett, Lake Norman Realty, Inc.

Dana Rhodes, DREI, instructor, Mingle School of Real Estate

Debbie Wey, CMLS

PRESENTERS

LEASE/PURCHASES AND RENTALS STATISTICS

Presented by: Steve Byrd

STATISTICS: LEASE/PURCHASE LISTINGS

STATISTICS: RENTALS

2,328 listings 671 agents

LEASE AND AGREEMENT TO PURCHASE,

AKA LEASE/PURCHASE

Presented by: H. Frazier Wallace

Difference between a Lease/Purchase and:

a lease agreement with an option to purchase

traditional mortgage seller financing buyer possession before closing agreement

LEASE AND AGREEMENT TO PURCHASE, AKA LEASE/PURCHASE

When should I call a lawyer?

When should the buyer do inspections?

What needs to be in the agreement?

PurchaseThe tenant is obligated to purchase the property at the end of the term based on the terms of the Offer to Purchase and Agreement that is entered into contemporaneously with the Lease/Purchase, and attached as Exhibit A and incorporated into the Lease/Purchase.

LEASE/PURCHASE-TERMS OF THE AGREEMENT

TermThis paragraph lays out the term of the Lease/Purchase, when the first monthly rental payment is due, and the amount of the first payment if it has been prorated.

LEASE/PURCHASE-TERMS OF THE AGREEMENT

Non-Refundable FeeHow much needs to be paid to the seller for taking the property off the market for the length of the term? This payment is non-refundable, and if agreed to, can be credited at closing.

LEASE/PURCHASE-TERMS OF THE AGREEMENT

RentHow much is the rent per month, and what, if any, of that monthly rent shall be credited against the purchase price at closing?CommissionsHow do I as the agent get paid for

bringing this deal together?

LEASE/PURCHASE-TERMS OF THE AGREEMENT

Obligations during the term of the lease for

Tenant Landlord

Default If the tenant does not perform

under the terms of the lease? If the landlord does not perform

under the terms of the lease?

LEASE/PURCHASE-TERMS OF THE AGREEMENT

Personal property of landlord left in/on the property during the term of the lease

Eminent Domain and Casualties: What happens if the house is struck by lightning and burns to the ground?

Landlord’s insurance requirements

Tenant’s insurance requirements Landlord bankruptcy: What

happens if the landlord files for bankruptcy?

What happens if the landlord is foreclosed upon?

Presented by: Stephanie Gossett

LEASE/PURCHASES AND RENTALS

Presented by: Dana Rhodes, DREI

N.C. LICENSE LAWCOMMISSION RULES

ARTICLE 1 93A-2 (A)

o Compensationo Real estate brokerageo For others

REAL ESTATE BROKERAGE

o Lists or offers to list

o Sells or offers to sell

o Buys or offers to buy

o Auctions or offers to

auction

REAL ESTATE BROKERAGE, CONT’D

o Leases or offers to lease

o Sells or offers to sell

leases

o Rents or offers to rent

COMMISSION RULE A.0104 (A)

o Every agreement

o Brokerage services

o Shall be in writing

o Signed by parties

COMMISSION RULE A.0104 (A) CONT’D

o Every agreement

o Brokerage services

o Between broker and

owner

o Writing from time of

formation

Fair housing language must be included.

COMMISSION RULE A.0104 (B)

oBrochure

oSales transactions

COMMISSION RULE A.0104 (C)

ESSENTIAL ELEMENTSIN AGREEMENT WITH OWNER

o Parties identifiedo Consideration spelled outo Legally competent partieso Performance of legal acts o Be specific

ESSENTIAL ELEMENTS OF A RENTAL AGREEMENT

o Parties identified

o Land must be identified

o All material terms set

forth

PROPERTY OWNERSHIP

o Rent – intangible right

o Appurtenant to land

o Needs to be addressed

COMMISSION RULE A.0107 (A)

o Tenant security depositso Deposited in trust or escrow account

o PB must deliver immediately to BIC

NORTH CAROLINA REAL ESTATE LAW

o Chapter 42, Article 6

o “Tenant Security Deposit

Act”

o Outlines three major areas

of security deposits

TENANT SECURITY DEPOSIT ACTHOW MUCH AND KEPT WHERE

o Security deposit based on term of lease

o Rental income and tenant security deposits

o Trust account

TENANT SECURITY DEPOSIT ACTPERMITTED USES

o Outlined in Article 6

o Tenant’s money – not

owner’s

TENANT SECURITY DEPOSIT ACTACCOUNTING TO TENANT

o Trust account location o Notify tenanto Accounting letter 30 days/60 days

o Abandoned property/deposits

CODE OF ETHICS – ARTICLE 11

o Standards of practice

o Competence

N.C. REAL ESTATE LAW

o Residential Rental Agreements ActoAct prohibiting retaliatory eviction

o Tenant Security Deposit ActoAct prohibiting self-help eviction

o Unfair and Deceptive Trade Practices Act

N.C. REAL ESTATE LAW, CONT’D

o Pet feeo Eviction procedureo Tenant’s personal propertyo Service Members Civil Relief Act

o Rental insurance

N.C. REAL ESTATE LAW, CONT’D

oRemedies for returned check

oMethod of eviction for violation of lease

oSexual harassmentoForfeiture of real propertyoContracts requiring writing

N.C. REAL ESTATE LAW, CONT’D

o Damage to property

o Summary Ejectment

o Victims of domestic

violence, sexual assault or

stalking

N.C. REAL ESTATE LAW, CONT’D

o Mortgages and deeds of trust

o Escheats and abandoned property

o Persons with disabilitieso Damage to property

Presented by: Debbie Wey

LEASE/PURCHASES & RENTALS

ADD/EDIT: LEASE/PURCHASE

o Casho Conventionalo Federal Housing

Administration (FHA)o Farmers Home

Administration (FMHA)o Lease purchaseo Loan assumption

o N.C. bondo Othero Owner financingo Personal loano Trade/exchangeo Veterans Administration

(VA)

Proposed Financing

SEARCHING: LEASE/PURCHASE

STATUS: LEASE/PURCHASE

o “Pending” (ignore the 60-day e-mail)o Some agents include a statement in the

“Remarks” explaining that the listing is a lease/purchase.

o “Sold” when sale is finalo TEMPO™ Advisory Group to consider a

suggestion for a separate status for lease/purchase listings that are under contract

MLS RULES: RENTALS

o Rental listings are optionalo Written agency agreement requiredo A single-family or condo/townhouse

property listed for sale or lease is permitted to have a second listing in the rental section of the MLS. o “Agreement to Procure Tenant” (Use w/

NCAR standard form 101)

MLS RULES: RENTALS

o Member Participants and Subscribers must disclose in the listing if they are the owners of or have an ownership interest in the property submitted to the service.

o Subscribers must sign an agency agreement with the listing brokerage when listing their own property in the MLS.

MLS RULES: RENTALS

o There is no standard NCAR form for listing a residential rental only to find a renter, without also acting as a property manager.

o Proceed with cautiono Ask an attorney to draft an agency agreement.o Commercial form 572 “Exclusive Right to Lease

Listing Agreement” is not designed for residential listings.

o Listings cannot be full service, i.e., “Full Service=No”

COOPERATIVE COMPENSATION

o All listings must offer cooperative compensation. o Percentage of gross sales priceo Set (or fixed) dollar amount

o Cooperating brokerages have a right to know what their compensation shall be prior to their endeavor to sell/lease.

o Cooperative compensation depends upon sale/lease.

LEASE/PURCHASEo If not specified in the listing, any

amount paid prior to the sale is a matter of mutual agreement.

o Examples:o ½ of first month’s rento ½ of cooperative compensation paid at

inception of leaseo Remainder paid at closing

COOPERATIVE COMPENSATION:

COOPERATIVE COMPENSATION: RENTALS

o Set (or fixed) dollar amount

o Percent of first month’s rent (common)

o Other

Q & A