In this unusual housing market, many people who must move are considering the option of a Lease or Lease Purchase Agreement. I will try to summarize some of the considerations.

I highly recommend using a professional Property Management Company to handle your lease agreement, market your home, screen prospective tenants, hold the tenant's deposit in a required trust account, handle payments, and supervise repairs. These professionals are familiar with Landlord/Tenant Laws in Georgia.

TAX CONSIDERATIONS

Before deciding to lease your home, consult an accountant to find out how leasing your home will affect your tax liability negatively or positively.

POSSIBLE TAX RAMIFICATIONS

1. Your Property Tax may increase in the next calendar year because of loss of Homestead Exemption.

2. If later sell your property, and you are living OUT OF STATE, you should know that the State of Georgia requires the closing attorney to withhold up to 3% of your gain at closing if you cannot show that you have sustained a loss.

HOME OWNERS ASSOCIATION

Check with your HOA to find out if leasing is allowed, and if it requires HOA written approval.

Give your tenant a copy of the Covenants and Restrictions, and address in your lease agreement whom is responsible for yard maintenance, etc. Ultimately, the HOA will hold the OWNER/LANDLORD responsible for any violations.

This goes for violations of COUNTY ORDINANCES, too, so become familiar with your county and city ordinances for single family neighborhoods.

FAIR HOUSING LAWS

EVERYONE involved in a real estate transaction is subject to the FAIR HOUSING ACT, including the property owner. Read more about the Fair Housing Act as it pertains to single family housing.  In addition to the Fair Housing Act, there is the Tenants' Rights Act of 2009 which protects the rights of tenants in the event that the home goes into foreclosure while subject to a written lease agreement.   

LEASE

In a rental, you retain ownership of the property. Typically, you will do a move-in inspection with the tenant. The lease agreement dictates the term of the lease with the start and end date. The monthly rental amount and when and to whom it shall be paid is part of the agreement. It should include language about what happens if payments are not received on time. It also details what utilities and repairs the tenant and owner are responsible for paying. The amount of the refundable security deposit is included (NOTE: The landlord must hold the security deposit in a trust account and may NOT co-mingle this deposit in a general operating account).

The Georgia Association of REALTORS(R) Lease Agreement is 10 pages long, so be cautious about using a 2-page agreement which may fail to address important legal issues.

LEASE PURCHASE OPTION

A Lease Purchase Agreement is a Purchase and Sale Agreement combined with a Lease Agreement. It includes the purchase price, the amount of earnest money (must be held in a trust account), closing date, and other details of a sale agreement. If the property is sold with a "Due Diligence" clause, the buyer will have a period of time to have the home inspected at the buyer's expense and negotiate repairs with the seller or terminate the agreement.  In that case, the buyer is entitled to a refund of earnest money.    The 9-page Lease Agreement  addresses all the details of the lease.

For a landlord,  a Lease-Purchase may attract a tenant who is committed to living in the house and one day owning it.  For a tenant who is not ready or able to purchase at this time, it offers the chance to settle into their new neighborhood prior to closing.

Lease Purchases can be fraught with pitfalls for the Seller and Buyer.  Here are just a few things which might go wrong before the closing date:

• The Buyers fail to make their rent payments and move out.
• The Buyers decide they don't like the house or neighborhood, and buy another house.
• Buyers and Seller disagree about repairs.
• The house fails to appraise for the agreed upon price.
• The Buyers can't qualify for a loan.
• The Buyers don't have funds needed for closing.

In these cases, the seller has lost a sale and may or may not have lost a tenant. The buyers have lost their dream. The real estate and mortgage professionals do not get paid.


ADDITIONAL INFORMATION FOR RENTERS AND LANDLORDS

• Landlord Tenant Handbook for Georgia (download .PDF file)

• Federal Fair Housing Law

RESEARCHING RENTAL LISTINGS (SINGLE FAMILY, TOWNHOME & CONDO):

GEORGIA MLS
http://www.georgiamls.com
Select: Find a Property
Select: By County Information
Select: Residential Rental

ATLANTA JOURNAL-CONSTITUTION
http://www.ajchomefinder.com
From the drop down menu, select RENTALS

FINDING A PROPERTY MANAGEMENT COMPANY IN YOUR AREA

I highly recommend using an experienced proerty management company, and not just a licensed real estate agent, because you want someone who knows landlord-tenant laws, maintains a trust account (required by Georgia), and is experienced and able to schedule repairs, collect rent, market your home to prospective tenants, and show the home. 

Below is a link to a few  property management companies in metro Atlanta:

http://www.rentlist.com/Georgia/Atlanta/

Many larger real estate companies have one or more property management specialists, so you might check with your local offices.  Again, I would caution against using an agent who has not been through property management courses and is experienced in landlord-tenant laws.