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Little Legal Lesson! Lease-Purchase? Don't Do It! Not in Texas!

By
Real Estate Agent with RE/MAX Properties

"We want to lease the home on a "lease-purchase".  How many times have you heard this lately?   

Today's market has changed drastically and there are many more lease transactions than in years past.  Many of the people wanting to lease homes have some sort of credit issue or financial reason they can not purchase.  Almost weekly I hear of someone wanting to "Lease-Purchase" a property.  This sounds attractive to both the would be buyers and the seller, but don't try this, fellow agents, without legal assistance.  This is when you call in the big gun, the attorney!  We wear a lot of hats, but we are not allowed to practice law. 

Here's the real deal!  At least this is true in my great home state of Texas!

  • Don't try to handle this by using separate lease and purchase contracts. 
  • There is not a TREC or Texas Association of Realtors forms for this.  DUH!  Don't you think it is a clue when there is not a form to cover a transaction type?
  • The ONLY way you should attempt to go forward with a lease-purchase transaction is to get an attorney involved.

Don't practice law if you are not an attorney!  Don't be tempted!  This issue keeps coming up and there are agents who will argue the point and insist that it is legal, but guys. at least in Texas, it is not legal.  

Agents, represent your clients well and explain that they must swing for the attorney fee, a bargain when you consider the risks involved in not doing it legally!  

At least this is the way it is in Texas! 

Posted by

                   Don't Move to Dallas...Until You See Rockwall on Lake Ray Hubbard

Out and About...
Rockwall

And the Surrounding Hometowns of the Lake Ray Hubbard Area
Rockwall, Heath, Royse City, Rowlett, Wylie & Sunnyvale

Barbara Hensley
Barbara Hensley Realtors 
972-772-9699

Search for Homes in Rockwall please visit
www.barbarahensley.com 

 

 

 
Bernadette Arzu
Serving Sugar Land, Missouri City, Richmond and Pearland - Sugar Land, TX
Broker-Associate, Keller Williams Realty SW

Absolutely true! At lease once a month someone calls me with a request for a lease purchase. Each and every time I turn them down because I'm a fish out of those waters. I swim where I know the pool.

May 27, 2012 08:56 AM
Barbara Hensley
RE/MAX Properties - Rockwall, TX
Homes for Sale in Rockwall County, Texas

Bernadetta - it is always best to swim where you know the waters! 

May 27, 2012 08:58 AM
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Barbara:  Someone had placed a bid last year on a property I had first day of the listing, full asking price... they were 2 attorneys, and after contracts were signed.. and after 4 weeks.. I started asking for the commitment.. another month and excuses excuses with my asking to speak to their mortgage broker...... we discovered that they both had FHA loans, were seeking another FHA loan..and  the banks  (there were 3 at that point) would not give them a commitment letter....  They then wanted to lease and then purchase....  My client stepped away.. As it turned out, they placed a bid on another proeprty... they were in contract for over 5 months, but they did finally get their mortgage...

 At the end of the day, my client's attorney told her not to get involved.. Perhaps it would have worked out.. but who knows..

May 27, 2012 09:22 AM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Barbara-Many have inquired about lease purchase and I guess some place on an TV infomercial, it's been made to look simple. The variables are too many to keep this process simple and protect all parties. Just as both parties need agents, both parties need attorneys too. Good advice.

May 27, 2012 09:27 AM
Barbara Hensley
RE/MAX Properties - Rockwall, TX
Homes for Sale in Rockwall County, Texas

Gay - UGH!  These things are not pleasant when they happen.  Better luck next time.  

Wayne - thanks for your confirming comment.  Better safe that sorry, right???

May 27, 2012 09:35 AM
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

Luckily we have such a contract and do quite a few but our office as with all contracts have them reviewed by an attorney.

May 27, 2012 09:56 AM
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Barbara.  Happy Memorial Day.  Lawyers are necessary for this kind of transaction.

May 27, 2012 08:43 PM
Clint Mckie
Desert Sun Home, commercial Inspections - Carlsbad, NM
Desert Sun Home, Comm. Inspection 1-575-706-5586

Hello Barbara,

Look to an attorney for these types of contracts.

I'm not an attorny, but I think it would be best to seek the advice of a Real estate attorney, not just any attorney.

Have a great day in Rockwall, Texas.

Best, Clint McKie

May 27, 2012 10:41 PM
Barbara Hensley
RE/MAX Properties - Rockwall, TX
Homes for Sale in Rockwall County, Texas

Joyce - lucky you!  In Texas we just can not do it without engaging an attorney.

Conrad - Yes, at times, there is only one thing we can do - call out the lawyers! 

Clint - I agree that it is best to use an attorney who does specialize in real estate for anything having to do with real estate contracts and issues. 

May 28, 2012 01:54 AM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

Good post Barbara,  So many agents dont believe this and try to use our forms to make it say what they will but it is not legal.

May 28, 2012 11:59 PM
Deborah Byron Leffler BzyBee Real Estate Lady!
Keller Williams Realty Boise - Nampa, ID

We can do them in our area but I sure don't recommend them!   Especially where are prices are still low....what happens at the end of the term if you can't get financing at the agreed upon price .....i definitely discourage them!

May 29, 2012 01:39 PM