How can I lease a property with deficiencies without being responsible for its shortcomings?

Asked by Alok Gupta, Phoenix, AZ Tue Dec 23, 2008

I want to lease a unfinished house . It is 150 miles away from phoenix in a small town. I was keeping it locked. Recently someone approached me and offered to lease it. At this time I do not have time to work on it and prepare it.

He said He will stay in it and prepare the house by doing work on it. the rental value for finished house is about 700-800 but he wants it for 300 and approx 20 hours of constructive work per month. I am fine with it.

I want to know what can go wrong. I do not have much exprerience with leasing or renting.

How should i safeguard myself, while still going ahead with the lease.

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Scott Godzyk, Agent, Manchester, NH
Tue Dec 23, 2008
You will first want to check and see what type of contractor he his, look at hos work, his level of experience and is he insured as a individual or company to do any work. The liability is huge. First does your house have a Certificate of occupancy because without one no one can live there. Then there is the pernmits. Are you going to pull them and live with his work being up to code, is the contractor going to get permit san dhave the inspections done as needed. Lastly if you do decise to rent it out,. you will want a lease that protects you. spell everything out. what you expect, that he has no right to take out anything he puts in or to get paid for the labor including no claim to any equity. i think it is too dangerous to make $200-300 month. be careful
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Carlos Ramir…, Agent, Mesa, AZ
Tue Dec 23, 2008

Besides the good points mentioned below, there might be other safety issues and contractual issues. Even if the two of you reach an agreement everything should be done in writting and the proper language and clauses should be in place. I have seen similare cases go wrong and both parties investing a lot of time and money in court just because their contract didn't cover all their special circumstances.

To avoid serious issues in the future make sure you get the help and advice of a professional before getting into that kind of agreement.
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David Chambe…, , Saint Petersburg, FL
Tue Dec 23, 2008
Good answer Todd.

The home might not be legal to rent out.
1 vote
Todd Lee, Agent, Phoenix, AZ
Tue Dec 23, 2008
There are several things that can go wrong... First of all is he a licensed contractor? If not, your work may not be up to code and the quality may not be very good. Second of all, there may be some insurance liabilities that you need to check out with your agent.

If these things don't bother you, then by all means get everything you are wanting done and both parties expectations in writing signed by both parties.
1 vote
L & R Proper…, , Arizona
Thu Apr 7, 2011
As a property management company that works closely with a several contractors, this agreement looks risky. Things to consider are what work needs to be done, because not all contractors are qualified for all repairs. You should get estimates for the cost of doing the work. By my math this agreement will have you paying him $25 per hour if this includes the materials then it is a good deal but if not you can probably get a better price. Over the course of a year this would add up to $ 6000 is there really that much work to do? As the other people have mentioned make sure you get all the details in writing including what work will be done, who pays for permits and inspectotions, ect, ect.
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Shanda, , Avondale, AZ
Thu Feb 12, 2009
Is he a licensed contractor is the major question. I would also say that you should approve any materials that are used and that includes paint color! How many lavendar rooms have we seen lately???
Get permits first before you do anything! The agreement should spell out in no uncertain terms that you are not responsible for any injuries. I would definetly contact a lawyer-too many red flags come to mind.
Get estimates from other contractors, don't just take his word for it.
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