Do A Good Thing With Caution
Lee owns a rental house. Lee wants to offer it to a tornado victim and allow them to pay the utilities until he sells the house. What kind of paperwork would be required to do this transaction?
QUESTION: Lee in Birmingham owns a rental house. It’s empty, clean, and for sale. Lee wants to offer it to a tornado victim and allow them to pay the utilities until he sells the house. What kind of paperwork would be required to do this transaction? Dave suggests a lease for one dollar a month.
ANSWER: I would do a full-blown lease for $1 a month. Just set the terms up on the lease. What I would make it to be would be a month-to-month lease, which means that you can give them at any time 30 days’ notice. Be very clear with them that they can live there as a charity, but just like a normal tenant, they have to take care of the property. They won’t have pets unless you allow pets. They won’t do illegal things there. They won’t paint your house or tear the house up. But they can stay there for free until you sell it, and they’ll be given 30 days’ notice.
It’s a very kind and noble thing you’re doing, but you need to have a lot of clarity, and frankly, I would be very blunt with them. I think they still will be just fine. If they cop an attitude about you being blunt or wanting to give 30 days’ notice, then you know you’ve got a potential parasite on your hands, and they’re not who you want to help.
Your rent is it’s accessible, clean, they don’t tear it up, and that’s the only rent they have to pay you. I think you can do that, but just like any other tenant, you’re going to vet the tenant, meaning you’re going to check them. You’re going to check their background, interview them, and check references just like if you were going to rent it to somebody. Treat it like a full business transaction that happens to have the cheapest price in history. Then, that keeps you from getting burned, and you get the right kind of person in there. Truthfully, you will get the result you want out of this because if you were to put a parasite in there, you probably haven’t helped that person anyway because they probably have other issues beyond tornado damage. You probably harmed them by letting them live there free.
If the tenant had a home destroyed, I would want it to be a similar price range home because of socio-economic ability to relate to your potential buyer. I want to do a good thing here, but I want to do it in a way that when I’m done I’m glad I did it. It’s just like when you’re going to do charitable giving. You don’t give a drunk a drink. We’re not going to assist someone in destroying their life. You’re doing your charity work with wisdom. I think it’s a wonderful thing you’re offering to do, but I would treat it just like you were renting the house.