Tenent Wants Lease In Corp. Name
I have my feelings on this, but would like to hear other opinions also. I have a prospect tenant for a single family rental. The prospect would like the lease in the name of his corporation, rather then his name. He said that is the way they always lease properties. He also wants to pay the full years lease upfront. What are your feeling/opinions on this?
Thanks
[ Edited by ken1415 on Date 01/15/2007 ]
If he is willing to pay all the rent up front, what do you have to lose? Certainly the benefits must be obvious-
Chris
Only an LLC can protect his personal assets, not a corporation.
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Duh, if the corporation defaults on the Lease, you can only sue the corporation, not the individual.
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I would go for it AND request the corp to provide me with a list of authorized users aka tenants as part of the lease agreement. I would also do routine inspections and watch for any improper activity.
Eric
I think LOKing is correct. The corporation (and LLC) only protects the officers as long as they have maintained their fiduciary responsibility to the company. If they knowingly break the law, commit fraud or otherwise misbehave within the corp (or the LLC), they can prosecuted or sued.
The corp (or LLC) will protect you from losses in the normal course of business ... etc.
Hope this helps.
JS.
Obey the law, treat everyone fairly, and maintain a personal liability policy.
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What is there to lose, a year in advance,
do frequent inspections, get a list of possible tenants, collect deposit.
Only loss would be if they completely trashed the prop. , not likely. Agree they just want the tax break.
I say do it.
[addsig]
About the security deposit: One of the few times in my life I was a tenant, going to school, I moved in to a room that was already leased out, similar to the situation you describe. Our solution was that I payed the departing tenant his share of the security deposit, then collected it from the landlord when I moved out.
Chris
Question?
Can you legally keep someone on the lease when they have made it clear they are moving out and you have agreed to let them out of the lease?
Suggestions:
1. have #1 submit in writing a formal request to be removed from the lease.
2. rewrite the lease after you approve #1 to be removed.
3. collect a new security deposit plus the pet deposit from the three new leasees.
4. after collecting the new deposit, refund the original deposit to whomever paid it to you in the beginning. how they decide to split it is not your problem.
5. it is not you place to tell any "trouble in paradise" stories to any of the other tenants.
6. after you have collected the new deposit, replace the carpet and do repairs.
7. monthly inspecitions will help you to avoid the pet problem, most tenants (in my opinion) will lie about having pets.
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Always rent to multiple tenants as "tenants in common." Accept only one deposit check and one rent check. Let them work out their differences between themselves. As some else pointed out, if they change members do it on an addendum with an approved completed application from the new tenant.
Jim
Quote:
On 2007-01-11 21:40, jimandlacy wrote:
Always rent to multiple tenants as "tenants in common." Accept only one deposit check and one rent check. Let them work out their differences between themselves. As some else pointed out, if they change members do it on an addendum with an approved completed application from the new tenant.
Jim
Agreed, and I always explain this to tenants BEFORE they sign the lease in spite of the fact that it is written in the lease.
thanks JimandLacy,
agreed, tenants in common is the only way to go. at landlord you do better no trying to sort their problems out.
Thanks for all your input and after reading your replies, I am going to take your suggestions and not take partial rents. Although, something is better than nothing.
Hawaii, yes, this is the same property. I hope it is not the house. But, I think next time it is vacant, I am going to lease to a family. I think I am done with trying to manage through roommate problems.
The good news for the cat damage is the urine problem is in the stairwell. The last tenants trashed the house and I was going to replace the carpet up the stairs and in the upper bedrooms. However, the carpet guys said they thought they could clean it and make the existing carpet work. So, for $100 they did a great job. So, this is old carpet and I will replace it when these tenants move out.
The only silver lining right now ... except I did get my January rent.
As an investor, and a paid property manager, I have noticed it is much easier to handle these questions and issues from the properties I do not personally own. Generally, as people, we care about others and their need for housing, etc, so we somehow end up emotionally involved. I would be probably asking the same questions as you if this was the situation in one of my own rental properties. However, if I was your property management company, I would have done the following:
1)Informed the tenants they can not remove anyone from the lease.
2)Have the tenant that wants to move out write a letter acknowledging that he/she is understands he/she is still responsible to perform under the lease contract.
3)Make tenant #4 apply as a normal applicant, paying normal application fees.
4)If approved, write an addendum to the lease stating a 4th person will be added and agrees to all terms of the original lease. Have all 4 tenants sign this addendum.
5)Make sure a complete copy of the file is sent to my legal team to make sure they are prepared to take action as soon as the next payment is missed.
I would handle the cat situation independently, with an individual addendum that all tenants must sign, and collect the associated deposit. This one is pretty straight forward, except for the fact that this situation is happening where you have other issues. It probably makes sense to address this issue first.
Rent New Tampa, Inc.
Renting in New Tampa has never been easier!
Good advice! Welcome to the forum RentNewTampa.
IMO these are good investment properties.
While they may not increase in value like your other properties, they make up for it by having good cash flow. There are drawbacks, in that your screening process is going to be a little different as will your pool of prospective tenants, but I like the properties in the not so good areas as they do cash flow nicely.
Think about/plan for your exit strategy -- if the neighborhood stays the same or deteriorates you will have a tough time selling without a significant discount on the price -- as you are seeing now since they are priced below assessed value and have still been for sale for a while.
Think also about how "hands on" this neighborhood is. How busy do you want to be? Sometimes, this kind of cash flow demands a lot of attention.
MC
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