Equitable Interest In Lease Option?
I want to draft an agreement that will protect me from a possible lawsuit from an L/O tenant who may claim that they have an equitable interest in the property because they have paid an option fee, or that part of their rent money was to be construed as a down payment on the property. I understand that you make the rent agreement and option agreement two separate documents to prevent this, but does the court ask for both in determining the outcome? Should any additional rent be paid in a separate check from the rent and placed in an escrow account? Does it need to be returned if the option is not exercised? Does the option money itself give the tenent equitable interest?
TENANT/OPTIONEE UNDERSTANDS AND AGREES THAT THIS OPTION IS NOT CONTINGENT UPON TENANT/OPTIONEE OBTAINING FINANCING FROM A LENDER OR FOR ANY OTHER REASON AND THAT THE FAILURE OF TENANT/OPTIONEE TO PURCHASE SAID PROPERTY BEFORE THE EXPIRATION OF THE OPTION TERM WILL RESULT IN THE LOSS OF ALL MONIES PAID, AS WILL THE DEFAULT OF ANY OF THE COVENANTS OF THE LEASE AGREEMENT, AND TENANT/OPTIONEE FURTHER AGREES THAT THIS OPTION IS NOT AN AGREEMENT FOR DEED OR ANY FORM OF OWNER FINANCING, NOR DOES IT CREATE AN EQUITABLE INTEREST OF ANY SORT, BUT THIS OPTION IS SIMPLY A RIGHT TO PURCHASE SAID PROPERTY UNDER SAID TERMS AND CONDITIONS, WITH SAID LIMITATIONS, AND UNDER SAID TIME LIMIT.
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"A deal is only as good as the quality of your Contracts." --Me[ Edited by LeaseOptionKing on Date 06/06/2005 ]