ask george & chuck
May 24, 2010

Leases and dogs, lending money to friends
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: My wife and I signed a lease to rent a house. We have two dogs and signed and paid all deposits. The landlord contaced us just before our move-in date via e-mail, saying that he made an error and that we must pay an additional pet deposit and sign another pet agreement. Can he do that?

Answer: Did the landlord know about the dogs and their sizes when you signed the original lease and paid the original deposits? If so, then he can't legally make such changes now without your written consent. If, however, you misled the landlord on your application about the dogs in some way, he may have a case.

Dear George: I've agreed to lend a friend $80,000, provided he uses his vacant commercial building as collateral. The building has an estimated market value of $500,000, is not a homestead, is not leased, and has no other liens. What forms do I need to record the transaction?

Answer: There are two good reasons not to lend him this money at all. First, if he can't find a bank that will lend him the money, he must be a poor candidate for a loan. Second, these kinds of loans often destroy friendships.

If you decide to lend him $80,000 anyway, do not perform this transaction without hiring an attorney. Structure the loan the way most commercial lenders would: take a complete commercial loan application in which the loan to your friend is secured by the friend's vacant commercial building. He will need to prove that he owns it, that it's free of liens, and that it's not his homestead. The determination of the property's market value must be performed by an accredited appraiser within the past six months. Your friend should also offer an explanation as to why the building is vacant. You will need a a promissory note and a deed of trust signed by the borrower after you've obtained the items on the application.