I've written several lease purchase agreements over the years. Some of them have been successful - but for some, the potential Buyer backed out near the end of the lease terms - terminating the sale of the home.
So it is very important that if you enter into a lease purchase or lease with an option to purchase - whether you are a Seller or Buyer - that you understand the terms and ask for professional guidance.
Here are some basics of each agreement (this is just a generally guideline - more rules and laws apply depending upon the state you live in and your specific agreement.)
Lease with an Option to Purchase is the way to go if you, as the Seller, aren't too concerned about selling the property at the end of the lease. As a Buyer, if you "might" or "could" or "would" buy the home, but aren't 100% sure you can or want to - this is also the best option for you. Here are some of the basics:
- Buyer pays the seller down payment money to to be used for a later purchase of the property. This money may be significant or very little depending upon the Seller.
- Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. Although it's negotiable, most buyers want to secure the purchase price from the beginning.
- The term of the option agreement is negotiable, but the common length is generally from one year.
- Down payment money is rarely refundable.
- Nobody else can buy the property during the agreement period.
- If the buyer does not exercise the option and purchase the property at the end of the option, the option expires.
- The buyer is not obligated to buy the property.
A Lease Purchase is the way to go for many people and is ideal for a Seller who wants to know when their home will sell and for the Buyer who "for sure" wants the home but just needs time to save money and get ready to purchase the home.
- Buyer pays the seller security money to purchase the property.
- Buyer and seller agree on a purchase price.
- During the term of the agreement, the buyer leases (like paying rent) the property from the seller for a predetermined time.
- The term of the lease purchase agreement is negotiable, but generally 6 months to a year is common.
- The security money generally does not apply toward the down payment.
- The Buyer and Seller agree on what percentage of the lease/rent money will apply toward the purchase of the home.
- The security money is generally nonrefundable.
- Buyers are often responsible for maintaining the property and paying all expenses associated with its upkeep, including taxes and insurance.
- The buyer is obligated to buy the property at the end of the agreement.
Lease options and lease purchase agreements also have different financing documents. The documents and laws regarding these options vary from state to state and it's important to get proper advice before entering into one of these agreements with a seller.
Gabrielle (Kamahele) Rhind - 2009. If you want to reprint parts of this - just email me for my permission rhindohana@msn.com. Buying or selling Tucson Arizona Real Estate? Click info@gabriellerhind.com and let me know how I can help you! Or visit www.BuyMyTucsonHome.com.
If you'd like more info about Mt. Lemmon homes, Tucson bank owned homes, Tucson lease option to purchase homes, Tucson rental homes, buying or seling your Tucson home or the Tucson real estate market or real estate news, email or call me at (520) 245.0242.
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