Rental guarantee?

[ems]

Our OTP unit will settle on Tuesday and we've signed with the developer for a 3 year rental guarantee. Rents have fallen considerably in the area since signing the contract and the rental guarantee which is 6.75% of purchase price. I just can't see how the developer can promise these rents with the way the market is currently. Is there anyway they could get out of the guarantee or are they tied until the 3 years are up?

 

[D.T.]

Easy - They're included in the purchase price.

 

[DaveM]

Yep you paid for your guarantee up front in your purchase price. Astute.

 

[chilliblue]

The two posts above are correct in that you have paid for the rental guarantee in the purchase price.

As to whether the developer needs to legally honour that agreement depends on what is written in your contract. Speak to your legal advisor who you used when you made the purchase.

As a side note, plenty of rental guaranteed properties never see a tenant live in the property during the term.

 

[marg4000]

So long as the developer doesn't go bankrupt - in which case you are on your own.
Marg

 

[Terry_w]

You would probably have a guarantee with a company. The company would probably not have many assets so it would be easy for them to dishonour the gurantee by not paying. You then will have a debt to a $2 company which cannot be enforced.

In summary - don't count on the guarantee.

 

[westminster]

Our OTP unit will settle on Tuesday and we've signed with the developer for a 3 year rental guarantee. Rents have fallen considerably in the area since signing the contract and the rental guarantee which is 6.75% of purchase price. I just can't see how the developer can promise these rents with the way the market is currently. Is there anyway they could get out of the guarantee or are they tied until the 3 years are up?

I have no idea myself but it will be interesting to see how this pans out.

What area is it in?

I hope for your sake that it's honoured. Was there a lot of fine print in the contract for them to wiggle out with?

 

[Benvolio]

nothing is for freeeeeeee