Is it legal in the state of TN to lease out your home if you still have a mortgage on it? My aunt says you can, and thinks you can just draw up an agreement without going through an agent or financing? I have no clue how this works? Help anyone?
2007-10-15 10:23:47 · 5 answers · asked by C.M. 2 in Business & Finance ➔ Renting & Real Estate
I live in TN and have a friend in the mortgage business. He said the state does not regulate this, however, the mortgage that is in place against the home is what you should look at. Most have wording that deal with you leasing out the home and your requirements to them. You definitely don't need an agent to do a lease, nor do you need special financing. I included the link he suggested to review any real estate law you may feel is in question.
2007-10-17 10:29:00 · answer #1 · answered by rukidden99 3 · 0⤊ 0⤋
If you're talking about a lease purchase, there's actually a lease purchase agreement in TN. You get a deposit and in your agreement, you set an amount for rent and a closing date of, like a year or two away so that they may be able to obtain financing. If they have not gotten financing by that date, you keep the deposit and any rent that was paid to you. If they get financing by that date, you can apply a percentage of the rent they paid towards the principle balance. If you are talking about just renting your home out, yes, it is legal to do so if you still have a mortgage on the property. Just make sure you stay current on your payments. Good Luck! I hope I answered your question.. ;-)
2007-10-15 11:37:23 · answer #2 · answered by Niksmom 2 · 0⤊ 1⤋
When you say lease, do you mean "lease to own"? Or do you mean "seller financed" That is called "land contract" back east.
Make sure you record the contract at the county recorder. Keep track of all payments (pay by cancelled check only, no money orders!!!). Make a copy of initial down payment as well. Have the seller add you to title.
You are however assuming a lot of liability as you are "2nd in line" on the deed. The seller doesn't really have a right sell it to you at this point since he/she doesn't even own it (the lender has the 1st lien). You could make payments for 5 years on the home and the "owner" could stop paying the 1st mortgage note and force the lender to foreclose. The lender could sell the house to cover their butt but you might get nothing if there isn't any equity in the home (while the current seller runs off with your money). They'll just auction the house to satisfy the amount owed to them and if there's anything left you'll receive the profits. Could be a sticky situation. Why not just buy the property and get a bank loan?
The other option is a "rent/lease" to own. Property values are headed south right now (and for the near future) so I wouldn't go that route either. If your credit is damaged and this is the only way to buy a home I'd rent for now. Believe me, you'll come out ahead. That same house will be selling for 10-20% less in 2-3years and you'll have time to fix your credit / save for a down payment.
2007-10-15 10:49:53 · answer #3 · answered by Richard S. 3 · 0⤊ 1⤋
I believe that you can do it without any problems. I have never tried it myself though. I would do a bit of research about all of the legal responsibilities and renter's rights in your state before you proceed.
Here is a site that might be helpful. I would like to own some rental properties one day and I discovered this site while doing some research. They might be a good resource to work from. It is the National Association of Independent Landlords.
http://nail-usa.com/
2007-10-15 10:28:02 · answer #4 · answered by A.Mercer 7 · 0⤊ 0⤋
go to the book store and get a book called Tenants Rights for your state....
it will walk you thru this process, to protect you and your property, in plain language, with no suprises..........
2007-10-15 13:07:23 · answer #5 · answered by ABCDEF U 4 · 1⤊ 0⤋