Lease with Option to Buy

    The laws are different in every state…these are some of the considerations in Nevada

 

From the perspective of the lease with option buyer...it sure sounds good!

1. Get into a great house with very little cash, and save up the down payment.
2. Maybe the Seller will give you part of your rent towards the down payment each month; after all you would pay a little more rent if this were the case.
3. Credit is not as big an issue as you are not buying right now, so you have time to clean it up.
4. If in the end you do not or cannot buy you are not out anything because you were just a renter.

The dangers…to the lease to option buyer

1. Is the deposit used option money or not?  Option money is not refundable to the lease with option buyer when he moves out because it is the price paid for the option to buy.
2. No matter how much the lease with option seller agrees to allow towards the down payment the lender will decide fair market rent and only allow the amount they think the lease with option seller should get, no matter what the agreement says.
3. In most cases the lease with option seller does not give the lease with option buyer the extra money paid towards the down payment if the lender disallows it or if the lease with option buyer does not buy.
4. If the option expires before the property is purchased the option money is usually forfieted and the lease to option buyer is only a renter.
5. How are repairs handled, are your treated like an owner and have to make them yourself or is the lease to option seller responsible?
6. If you do not buy and you damage the property you can still be sued for the cost of the damages.

From the perspective of the lease with option seller...it sure sounds good

1. As an owner you can sell the property and still get it back without foreclosing if the lease to option buyer does not perform.
2. It opens the door to folks who want own but cannot right now for some reason.
3. Because they are trying to buy the property they will take better care of it than regular renters
4. If the lease to own buyer doesn’t buy it you can just do it all over again with someone else and you get to keep their option money.
5. The option is only for a limited amount of time so if the time elapses and the lease to option buyer does not buy his option money if forfeited and the option is expired, now you can easily do it all over again without worry.

The dangers…the lease to option seller

1. If there is a separate deposit and option price, the deposit will have to be returned to the lease to option buyer when he moves out less the cost of repairs.
2. The lease to option buyer cannot be evicted in some cases, as he has an equitable interest in the property and is considered an owner in the eyes of the law, so you must do a judicial foreclosure if he does not pay rent or there is some other problem.
3. How are repairs handled, are your treated like a landlord and have to make them yourself or is the lease to option buyer responsible?
4. Will you have to refund part of the rent to the lease to option buyer when he moves out if he does not buy the property because of his equitable interest?

USE A REAL ESTATE PROFESSIONAL AND AN ATTORNEY FOR THIS!

THERE ARE SOME CASES WHERE THIS WORKS REALLY WELL

OR IT COULD TURN INTO A NIGHTMARE –

THE PROFESSIONALS YOU CHOOSE MAKE THE DIFFERENCE!

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