Agreement made this __________ day of _______________ by and between ____________________________ hereafter known as LESSOR and ____________________ hereafter known as LESSEE.
Whereas the LESSOR is desirous of conveying his right title and interest in the property known as , a parcel located on the side of , distant feet from the intersection of and feet and inches by feet inches, and
Whereas the LESSEE lacks sufficient capital to render payment in full in exchange for unencumbered title to said property, and
Whereas, as Jews, both parties are bound by religious prohibitions against usury which prevent the execution of an interest-bearing purchase mortgage,
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. The parties hereby enter into a leasehold agreement for a period of ___________ years commencing on the 1st day of ___________ and ending on the _____________ day of _____________.
2. This lease shall be a net-lease and the LESSEE shall have the full rights of possession of the house and every portion thereof and may sublet any portion thereof to any party he desires.
3. Notwithstanding delivery of deed by LESSOR to LESSEE and the recording of such deed as between the parties named herein the LESSOR shall continue to be owner of said property and LESSEE shall be deemed a nominee for the LESSOR and shall reconvey title to LESSOR in the event of his default of any of the provisions of this agreement.
4. The monthly rent for the premises shall be $_____________ or $___________ per annum during the entire term of the lease. The rent shall be paid promptly on the first day of each and every month. In the event that the LESSEE fails to pay the rent by the tenth (10th) day of the month, LESSOR may terminate the lease pursuant to the provisions of paragraph 13 hereof.
5. LESSEE shall make all payments of taxes, water charges, and sewer rents [as well as all payments of interest, amortization or similar payments required by the first mortgagee, ____________]. Failure to make such payments within the time period in the mortgage or to exhibit proof to the LESSOR that such payments were made whenever such evidence is requested shall constitute a default under the terms of paragraph 13 hereof and be grounds for termination of the lease.
6. LESSEE shall pay all real estate taxes, water charges, sewer rents or any other municipal charge which may constitute a lien against the property or the house, and [if the first mortgage is satisfied or the first mortgagee does not collect the taxes and water and sewer charges in escrow], LESSEE shall pay such taxes and charges to the City of New York within thirty (30) days of the date they fall due. LESSEE shall exhibit proof of payment of such taxes and charges upon request by the LESSOR. If LESSEE fails to make such payments within the time period, LESSOR may treat such non-payment as a default under the terms of paragraph 13 hereof, and/or advance such taxes and charges by direct payment to the City of New York and such amount shall be deemed additional rent due by the LESSEE forthwith.
7. LESSEE shall at all times have property damage insurance in the sum of not less than $__________ or at least 80% of replacement cost of the house, whichever is more. The insurance policy shall name the LESSOR [and the first mortgagee] as co-insured under the policy, as his [their] interest[s] may appear. In addition, LESSEE shall at all times have liability insurance in effect for at least $100,000/300,000/500,000 in which the LESSOR shall be named as co-insured. LESSOR shall be furnished with an official copy of both the property damage and the liability policies. In the event that LESSEE fails to obtain such insurance, such failure shall be deemed a default under paragraph 13 hereof and/or the LESSOR may obtain such insurance for the LESSEE and any other interested parties and recover the cost of such policies as additional rent forthwith.
8. LESSEE shall at his own cost and expense provide all services necessary to be provided for himself and any other occupants including heating, utilities, painting, repairs, maintenance and any other ordinary expense item related to the property. LESSEE agrees to make all interior, exterior, extraordinary and structural repairs, including replacement of the roof as is required by law or necessary to put, keep and maintain the house in good condition at all times during the term of the lease. LESSEE shall also keep the sidewalk in front of the house in good condition and remove all snow, ice, rubbish, or unlawful obstruction therefrom. If the LESSEE shall fail to comply with his obligations under this paragraph, and such failure to make repairs materially affects the value of the house, or code violations are placed against the house, and the LESSEE fails to make repairs within thirty (30) days after service of a notice by the LESSOR directing him to make such repairs, it shall be deemed a default under the terms of paragraph 13 hereof.
9. LESSEE may make any alterations, decorations, installations, additions and improvements to the house, so long as he does so in compliance with all rules, regulations and laws of any governmental agency having jurisdiction thereof, and they do not in any way impair the market value of the house.
10. Upon the expiration of the lease or other termination of this lease, LESSEE shall surrender the house in good order and condition, ordinary wear and tear and damage by the elements excepted, provided that LESSEE has complied with his obligations under paragraph 8 hereof.
11. The LESSEE shall have the right at any time during the term of this lease to purchase the property at the price herein set forth:
12.
a) The purchase price shall be $___________representing the agreed fair market value of the property on this date, minus a credit against the purchase price of a portion of all rent payments made by the LESSEE to the LESSOR up to the date that the LESSEE gives the LESSOR written notice that he will exercise his option to purchase the property as set forth herein. This credit shall be computed by deducting from the first monthly rent payment that portion of the rent payment equal to one-twelfth of _____________% of the purchase price. The balance of the rent payment shall be deducted from the purchase price. Subsequent deductions from the rent payment credit shall be made on the basis of one-twelfth of _____________% of the balance of the purchase price as diminished to reflect prior rent payment credit.**A standard Schedule of Direct Reduction Loan may be adapted and incorporated in this agreement. The sample table following this form is adapted from a loan schedule providing for repayment of $20,000 at 10% interest over a five year period.
13.
[b) In addition to the sum set forth above the purchase price shall include a sum equal to _____________% of the unpaid balance of the purchase price as set forth above.]****This clause is designed to yield the same effect as stipulation of a penalty for prepayment of a mortgage.
14.
This option shall be exercised by service of a NOTICE by LESSEE upon LESSOR of his intention to exercise the right to purchase. Such notice shall indicate the purchase price set forth in this paragraph and any adjustment reflecting rent payment credit as set forth herein. Unless the LESSOR disputes the calculation of the purchase price then due, the LESSEE shall pay the balance of the purchase price within ten (10) days of the service of the NOTICE by cash, certified or bank check payable to LESSOR. If payment is not made, the notice shall be null and void, but the LESSEE may serve another NOTICE of election to purchase at any time, provided that at least ninety (90) days have elapsed from the first notice. The LESSOR shall waive the ninety (90) day requirement if LESSEE is under a contract to sell the property to a third party and the closing has been adjourned due to circumstances beyond his control. Upon exercise of the option and payment of the purchase price the LESSOR shall execute any further documents, including a satisfaction of mortgage which may affect the LESSEE'S title to the property, as may reasonably be required. LESSOR may not sell, encumber, pledge, or otherwise affect the LESSEE's option unless the deed or conveyance expressly subordinates such conveyance to the terms of this lease and option agreement.
15. LESSEE may not transfer, sell, convey or otherwise alienate his title to the property or his leasehold interest under this lease without the prior written consent of the LESSOR. LESSOR shall not unreasonably withhold his consent. If any sale or transfer is made in violation of this paragraph, it shall be deemed a default under paragraph 13 hereof. Notwithstanding the foregoing, the transferee or purchaser shall have the same right as the LESSEE to purchase the house upon the same notice and conditions set forth in paragraph 11.
16. In the event LESSEE fails to make timely payment of the rent provided in paragraph 4 or any additional monies due under paragraphs 6 or 7, LESSOR may serve a written notice upon LESSEE that the lease will be terminated if such rent is not paid in full within ten (10) days from the date of service of the notice, and if such payment is not then made, the lease shall be terminated for all effects and purposes. In the event LESSEE fails to comply with his obligations under paragraphs 5, 6, 7, 8, or 12 and LESSOR elects to hold LESSEE in default, he shall serve a written notice upon LESSEE that if such default is not cured within thirty (30) days from the date of the service of the notice, the lease will be terminated. If such default is not then cured, the lease shall be terminated for all effects and purposes at the end of the thirty (30) day period. Upon termination of the lease under the provisions of this paragraph, LESSOR shall immediately re-enter and take possession of the house by any legal means, including summary proceedings. LESSEE shall not have any further right, title, claim or interest of any kind or nature whatsoever in the house. LESSOR shall have the right to demand that the LESSEE execute any and all documents to transfer title to the property to the LESSOR if he so desires.
17. In the event the whole or any substantial part of the premises is taken by condemnation for a public purpose, the lease shall terminate upon vesting of title in the condemnor and the LESSOR shall be entitled to the full amount stipulated as the purchase price of the property as set forth in paragraphs 11a and 11b were the option to purchase to be exercised, and the LESSEE shall be entitled to the balance of the award if any.
18. In the event of a fire or other casualty upon which the parties are covered by insurance, and the LESSEE fully and satisfactorily restores the premises to its original or better condition, LESSEE shall be entitled to all of the insurance proceeds.
19. Upon expiration of this leasehold agreement and unless terminated prior to that date in accordance with the provisions of paragraphs 11, 13, or 14, the LESSEE shall have the option of purchasing the property upon conveyance of the sum of $1.00.
20. In the event of any controversy arising out of or related to this lease or any other matter related to the same transaction, the same shall be submitted to binding arbitration in accordance with Jewish law by a tripartite panel of qualified rabbis versed in such law. LESSOR and LESSEE shall each be entitled to appoint one member of this panel; the two members appointed in this manner shall appoint the third member of the panel. The award by a majority of such panel shall be final and shall be confirmed in any court of competent jurisdiction pursuant to the CPLR. An action shall be brought before a civil court only in the event of failure of one of the parties to appear before a rabbinic tribunal and only upon leave from a rabbinic tribunal.
21. Any notice which must be given hereunder shall be served personally or by certified or registered mail to the party's last known address.
22. This Agreement shall not be changed or modified orally. It shall be binding upon the parties, their assigns, heirs, legatees and successors in interest or title.
Made in the Borough of Manhattan, City and State of New York on the date aforesaid.
WITNESS
Name:
Address:
WITNESS
Name:
Address:
SAMPLE SCHEDULE OF DIRECT REDUCTION LOAN