Leasing with the Option to Buy
Leasing with an option to buy means a renting tenant signs an agreement with a landlord stating that the tenant can buy the property at the end of a certain time period stated in agreement. The owner is obligated to sell at the option price, but the tenant is not obligated to buy. The tenant can buy the property only if the landlord exercises the option.
The lease agreement should have a clause that terminates the option to buy if the tenant in any way violates the lease or gets evicted before closing the agreement to purchase.
Usually, purchase price is set out in the original lease-option agreement – means the purchase price is set according to today’s market, not in the future when the option may be exercised.
An option to buy doesn’t give the tenant legal title to the real estate. The tenant becomes a purchaser only upon exercise of the option, at which time the landlord-tenant relationship ceases and the option becomes an absolute and binding contract of sale.
A unique feature of the lease-option is the rent credit. The tenant usually pays above-market rent for the property, but a (nonrefundable) portion is credited toward the purchase price if the buyer decides to exercise the purchase option.
Lease with the Right to purchase becomes more and mover popular nowadays at Charlotte metropolitan area. Contact me if you want to learn about the opportunities.