Direct-financing leases are a little less obvious. I’d be lying if I said that I don’t know the difference between a direct holding lease and a sales-type lease in my neighborhood. For example, the sales-type lease is a direct holding lease, so it gives you the freedom to sell to a new buyer, but the direct holding lease is a sales-type lease, so it doesn’t give you the freedom to sell to a new buyer.
If you have a direct-financing lease, you are allowed to sell to your friends and family and receive a percentage of the sale. On the sales-type lease, you are allowed to sell to a new buyer and receive a percentage of the sale, or you can pay the rent yourself. But if you are an existing resident of the subject premises, you are allowed to sell to a new buyer, and receive a percentage of the sale/rent.
If you’re an existing resident of the subject premises, the sale to the new buyer is free. But if you’re not existing, the sale to the new buyer costs money.
The sale of the subject property is free and the sale of the new buyer is free. But the sale of the existing resident of the subject premises is free if you have an existing lease. And if you already own the subject property, then you get to keep the percentage of the salerent as long as youre an existing resident.
Sales-type leases start out like a lease, but the new buyer pays the percentage of the salerent that they pay for a freehold. This is a direct-financing lease. The sale of the new property is free of the lease and the new buyer pays the percentage of the salerent that they pay for the sale. In this situation, the new buyer doesn’t pay any of the percentage of the salerent that they pay for the lease.
One of the main differences between a direct-financing lease and a sales-type lease is that you can change the percentage of the salerent youre paying for the lease with a change to the form. In a direct-financing lease, you can increase or decrease the percentage of the salerent youre paying for the lease by writing a specific increase or decrease in the percentage or by changing the form.
The form where you can change the percentage of the salerents is called an “Adjustable Percentage of Salient”. However, it is not possible to change the amount of the salerent, the lease term, or the rent.
This is because the term of a lease is, in essence, the salary youre paying to the business, which is paid by the business’s shareholders. Most lease agreements state that the rent is the annual salary plus any increases for past years, if any. And since any increases are calculated based on a percentage of the salerent youre paying, the salary is the amount youre paying for the first year plus any increases for the years youre paying for.
The rent is the amount youre paying for the first year PLUS the rent youre paying for the next 2 years.