Why Should A Tenant Go With A Lease Purchase?

Comments(7)

• 
  mattfish117th July, 2004

  A lease purchase isn't all about the down payment. Its about the mortgage as well as the down payment. If a buyer can't be approved for a mortgage right now, after 3 years or so of on-time rental history they will have a better chance of getting approved for the mortgage!
  
  I would ask for closer to $15k or $20k on a $500,000 house as the non-refundable deposit.
  
  Does this help? What do you think?
  
  Good Luck!

• 
  rcy7th July, 2004

  thanks Mattfish,
  for the 15k deposit, who get to keep this non-refundable deposit? 3 years later and the tenant wants to exercise the option to buy the house, does he get the 15k depsosit back?

• 
  DKirby7th July, 2004

  No. He does not get the 15k back. That's the beauty of a lease option.

• 
  mattfish117th July, 2004

  The $15K can go towards the purchase price if the tenant buyer excercises the option.... If he leaves the lease and doesn't exercise the option - you keep the $15K...l NON REFUNDABLE!
  
  Beautiful!
  
  Good Luck!
  [addsig]

• 
  rcy7th July, 2004

  so who's right? according to Kirby, if the tenant exercise the option and buy the house, I keep the 15K; but according to Mattfish, the 15K apply toward the purchase house.

• 
  edmeyer7th July, 2004

  rcy,
  
  With a lease option there is variety depending upon imagination and what the parties agree to. The lease and the option are often tied together and sometimes are one document. My preference is to have separate documents that refer to each other.
  
  I think what may be confusing is associated with the option. The optionor is offering an option to purchase and the optionee is giving some consideration for the privilege of exercising the option. The consideration can take many forms and is up to the parties.
  
  It can be a single lump sum payment or it can be in the form of a monthly payment or a combination of the two. The consideration can be applied to down payment or price reduction if the option is exercised or not-- depending upon what the parties agree to. Unless it states otherwise in the agreement, the optionor is entitled to all of the consideration for offering the option to the optionee. One nice thing is that tax on option consideration is deferred until after the option is exercised or abandoned (unless the tax laws have changed since I last checked).
  
  Often if there is a separate lease and option agreement, they reference each other. In particular, the privelege of the option may be tied to performance under the lease.
  
  I hope this is of some help.
  
  Regards,
  
  Ed

• 
  rcy8th July, 2004

  very well explain.
  thanks.