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PROPERTY LIFE LESSONS 3 – Part 1

Guest post by: Clarissa Leary

Article Overview: Real Estate Contracts and Lawyers

PROPERTY LIFE LESSONS 3 – Part 1

Real Estate Contracts and Lawyers

Rent to Purchase Contracts

Over the years, I have learnt some big lessons of Purchase Contracts. I do my own conveyance, but every now and then, I learn some new lessons and need to get Lawyers involved giving advice.

When it comes to Lawyers, you need to do your research and double check on their advice and skills. Ask lots of questions. Remember, they are working for you and no one looks after your money better than YOU.

When I purchased my second Property, I had separated and didn’t have a deposit because the separate hadn’t been sorted out yet. I was living with my parents, I needed a home for myself and my daughter, but I didn’t want to rent.

I found a great little unit in a 16 unit development that was a Rent to Purchase. The Real Estate Agent gave me the Contract and said I would pay all the money off the Purchase Price, by means of rent over 12 months, and that would then become my deposit, so the banks would give me a loan. PERFECT!

I worked it out, I could have $10,000 paid off the unit, the Purchase Price was $42,500 back in 2001 and hopefully I would have the settlement monies within 12 months and pay more off as well. I would be able to get a loan by the due date.

I paid a deposit of $1000.00.

Most Rent to Purchase Contracts work that the Rent is split, part off the deposit and part to the Owner as Rent or Administration Costs. I thought I was lucky.

I gave the Contract to my Lawyer and he said it was fine. Over the year, I would get statements from the Real Estate saying how much I had paid.

Twelve months later, the Real Estate confirmed how much I had paid. I had my loan approval organised, I was getting excited. Then, I received a call from the Real Estate, the Owner’s Lawyer, picked up an error in the contract that meant that the monies I had paid every week was Rent and not the Deposit for the Property, I was devastated. I rang my Lawyer and he said yes, actually there is an error. I said to the Lawyer that he had checked it and said it was correct. Both Lawyer and Real Estate agreed that they thought it was to come off the Purchase Price. I had a meeting at the Real Estate Agent’s Office with the Agent, Agent’s Manager and My Lawyer. I couldn’t come up with more money, I had done renovations to the property and I really wanted this Unit. They agreed that they had made an error and the end result was that the Lawyer and Agent would pay negotiate with the Owner’s Lawyer and amount. I would pay $1000.00 and the Lawyer and Agent would pay the difference. I agreed. I then went on to buy the property.

I fixed this Rent to Purchase Contract, where it was wrong and used it for my own Rent to Purchase Sales. I had done one Rent to Purchase Contract that was successful, both myself and the Purchaser was happy. I used this for another two Rent to Purchase Sales, that ended up having problems!

I had got this same Lawyer to do the Contract for House 2 in Property Life Lessons 3, once I went to the new Lawyer, I got her to check the two Rent to Purchase Contracts and found that they had potential problems in them, variations where done before any major consequences happened, where I was going to be out of pocket.

Lessons Learnt

Don’t use the same Contract if you had problems with it before, even if you think you have fixed it yourself. Pay the Experts to do the Contracts.

Even with some Lawyers, you need to do your own Research. Try and learn the basic jargon of Contracts.

Watch your Experts, ask more questions, and even consider a second opinion. Check all your options.

Make sure you only have one Property in One Trust. If you are sued, it harder for them to get money out of you, the trust company is a $1.00 company, so you get more Asset Protection when being sued.

Be strong and stand Confident, if I didn’t do that with the Meeting with Lawyer and Real Estate Agents, I could have lost the deal. They made the error, get them to help fix it.

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Article Tags: Bruce Sloan, Business Coach and Mentor, Business Coaching and Property Coaching, Clarissa Leary, Professional Entrepreneurs Business and Property, Property and Business Career, Property and Business Coaching, real estate contracts, Think Rich Be Rich



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