NASQT: Will the Owner Consider a Lease With an Option to Purchase?
This question pops up every now and then. Usually from prospective tenants that really want to rent a home and they want to ensure that they have the best opportunity at being offered the unit if the owner agrees to a lease with an option to purchase.
The single most misunderstood factor with regard to a lease with an option to purchase revolves around the following terms: security deposit, down payment and lease option payment. Usually after I address this concern, the lease with option is no longer a part of the conversation.
When someone inquires about a lease with an option to purchase, the first question that I ask them is "how much of an option payment are you working with?" The usual response is "huh?" This lets me know that the person really doesn't have a clue about what a lease with option to purchase really entails. In Alabama, the option payment is usually more significant than a security deposit and oftentmes a security deposit is required in addition to the option payment.
The option payment ensures tha the seller will not sell the home to anyone esle as long as the lease option buyer has the option to purchase and has not violated the terms of the the lease option agreement.
In Alabama, the lease and the lease with an option to purchase are usually two entirely separate documents.
One of the first questions that I get (after will the owner consider a lease with an option to purchase) is how much is the down payment? When working with a lease with an option to payment, there is no down payment. Instead there is an option payment which goes directly to the seller and does not have to be held in escrow and is non-refundable. In a true lease with option to purchase, the option payment is not applied to any future purchase as a down payment. Inquirers are usually outraged by this fact, as they have been misinformed or have been long time believers of urban legends regarding how lease options work. Down payments are associated with lease purchases. NOT lease with options to purchase.
I usually tell people that if all they have to work with is a security deposit, then perhaps they just consider renting without the option to purchase because in fact, that is all they will really be doing.
Many of our Bham WIiRE Rentals are available for lease with an option to purchase.
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