Financing in Newark>Question Details

Matt, Both Buyer and Seller in Mount Laurel, NJ

I was in talks with an agent in NJ and was looking to make an offer to lease option (rent to own) a condo

Asked by Matt, Mount Laurel, NJ Fri Aug 22, 2008

when
she called me back and said the head realtor at her work told her that you cannot do a sandwich lease option (assigning your option to someone at a higher price and pocketing the difference) and/or an assignment in the state of New Jersey. I wanted to know if this is true? Can states limit your ability to assign your contract/option to purchase to someone else? Part of me want to say that this is just some old crusty agent that is just being negative, but a part of me is saying hey this is Jersey and it could be true. She made it seem like her boss had more of an issue with the assignment portion of the contract. Almost like assigning contracts in NJ is completely illegal if you don't actually purchase the home. I didnt understand how you would differentiate that? If I have a contract stating I have the option to purchase and I have one that I purchased straight up with the ability to assign, it is the same thing. Are assignment/sandwich lease options illegal in NJ?

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Hi Matt,

Have a quick free consult with a real estate attorney (who you'll then use afterwards). It sounds like your agent is inexperienced and her boss doesn't want to support a deal where they won't get their big cut. I would not trust their word in what you can or can't do, since this is a contract issue - and in NJ contracts are done by lawyers.

You may wish to consider PA, assuming that you don't work in Philly (4% city tax). PA has much lower income tax than NJ (3.03 vs what you pay now - likely 5.25 or 6.37) and lower property taxes also. When you add those up (not counting possibly expensive association fees), it may be worth your while to move a touch across that river and reap the savings!
0 votes Thank Flag Link Wed Apr 8, 2009
Of course, a sales contract can include any terms that both the seller and buyer want. The typical sales contract usually specifies that the contract cannot be assigned without written permission from the seller. Good luck finding a realtor for this one. It appears complicated and filled with pitfalls for the buyer, seller and agents. I would not take on such an arrangement.
0 votes Thank Flag Link Mon Aug 25, 2008
All contracts are assignable unless they state otherwise. Most sellers, landlords and realtors use or make contracts that are not assignable. People can always write in exceptions or changes to the standard contract so long as all parties agree and attorney's review it for compliance to state laws.
Other questions you may want to answer before you go ahead is whether the assigned contract is financeable by a lender when it is time to buy and whether it is insurable by a title-company.
Realtors might have an issue with what and when they get paid. do they only get a rental commission now, and a sales commission years down the road, or do they get a sales commission now.
Good luck.
Brian Kumahor
Essex County, NJ
Web Reference: http://www.housefreedom.com
0 votes Thank Flag Link Mon Aug 25, 2008
Speak with your attorney, this is certainly a legal question. In addition standard contracts are just that but by no means are they the only contracts used. (attorneys write their own)
0 votes Thank Flag Link Fri Aug 22, 2008
Standard NJ contracts have a "no assignment" clause in them. That's for a purchase. I don't know about sandwich lease options. You should ask a good real estate attorney to answer your question.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Fri Aug 22, 2008
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