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I have a renter that is now 3 months behind and he wants to give me his car to pay rent.

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  • I have a renter that is now 3 months behind and he wants to give me his car to pay rent.

    NY

    I have a renter of a room that is now 3 months behind on rent and he wants to give me his car to pay rent.

    Is that okay for me to accept it? Is he trying to trick me somehow?

    The bluebook value is 6000 dollars and he owes 3000.

  • #2
    Yes, it's OK to accept it. Perfectly legal.

    Just understand a few things.

    1 - Make sure the title is in his name only.
    2 - Make sure there are no liens (loans) on the title. You can verify with the DMV.
    3 - Make sure the state inspection sticker is valid and up to date even though you'll need a new one.
    4 - Make sure all the NY forms are properly completed.
    5 - Make sure you get all the keys.
    6 - Have him drive the car to your house, remove the plates and hand them to him.
    7 - Make a written contract that the car is in lieu of rent. Make two duplicates and both of you sign both.

    Understand that the value of the car covers past and future rent so put something in the contract about future rent contingent on how much you sell the car for (not "value"). Sell the car immediately so you have a finite number of dollars to apply to rent. Otherwise you'll have a dispute about the "value" of the car. If you want to keep the car, put something in the contract as to how many future months rent the car will cover. The disadvantage there is that you end up losing money if you sell the car for less than the "bluebook value" though you'll have the use of it.

    Also understand that the car is still rental income and whatever amount you agree on has to be reported on your Schedule E.

    Comment


    • #3
      Wow that's a great and helpful answer! Thank you!

      I was going to just tell him to sell the car and pay me but I figure he will just blow at least some of the cash if he does that so I have a better chance of getting paid this way, and he doesn;t have to go through the work of selling it. This was his idea also.

      Very helpful thanks!!!!

      Comment


      • #4
        With proper precautions this could work out well for you.

        It's something I would have done when I had my rentals long ago.

        Comment


        • #5
          Be sure to document everything and agree to how much rent this applies to.

          Comment


          • #6
            I would be careful, these renters are tricky little bastards.

            Comment

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