I think the "best" way may depend on who you are representing in the transaction. I had a very good agent approach me today with a combination form he was thinking about using for one of his listings. If he had been representing the tenant/prospective buyer, I might have encouraged him to use it.

Over the last 10 years in a range of different markets, I have seen law suits periodically arise over lease-with option-to-purchase contracts, usually over money, price and equity. Many of the suits are a direct result of well-intentioned, but sloppy writing by Realtors and/or attorneys.

In brief, if I were a listing agent receiving an offer of a lease with-option-to-purchase contract, I would counter with two separate documents: a lease for the agreed upon period of time and a sales contract, to be executed whenever the tenant's financing is approved and ready to close.  You can also spell out credits and other terms mutually agreed to, but the tenant must successfully perform on the lease, then purchase the property.

If I were the leasing agent, I would probably try for the combined document approach and try to lock the seller into as favorable terms as possible. Although, I might not want to lock the price in if the market is still projected to decline. If this were 2000-2005 and I asked the seller to lock the price for 12 or 18 months, he would probably hand me some windex to clean my third eye as he wondered which planet I was from. If the seller agreed to execute an agreement giving my client the option tp purchase, I would also have my attorney record the option in the county land records.

It may be different in other parts of the country, but it is rare for a lease-purchase contract to actually  close in the Northern VA market. 

How do you handle lease-with-option-to-purchase in your market area? Does it happen often?  

Dave Rosenmarkle

Broker Owner

Highland Realty

(703)538-2566

davidrose@mris.com

www.HighlandAgents.com