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#462487 - 09/21/18 12:20 PM Lease Option Agreements
nyropist Offline
Junior Member

Registered: 09/21/18
Posts: 2
Loc: South Carolina
Sorry if this is long winded! But I do have a few questions pertaining to Lease Option Agreements.
Can I use the same “Lease Option Agreement” for both sides of the “seller/me” and “buyer/me” , and just change the terms?
After I find “tenant/buyer” for “seller/me” for the “home owner”, I want to leave the deal because of no equity, or I just don’t want to stay in the deal. Do I just simply “assign” the Lease Option? Is it really that simple and easy? If so, do I “assign” the “tenant/buyer” LOA to the “home owner” or is it the other way?

This is the one I’m have problems with, in a sandwich lease. At the end, and time of closing with “tenant/buyer” how do I reflect the “tenant/buyers” $10,000 “deposit” or “non-refundable consideration fee” if the “tenant/buyer” believes that the $10,000 is going towards the $120,000 purchase price of their new home?
SELLER/ME TENANT/BUYER
AGREES TO $100,000 purchase AGREES TO $120,000
$1,000 DOWN $10,000 DOWN
$900.00 IN RENT/MO $1,200 IN RENT/MO
In the front end, I will be getting the $9,000 from “TENANT/BUYER”, on the back end I’ll get the rent spread and the difference of $10,000 at the time of closing. The “tenant/buyer” is going to tell the loan company the need $110,000 loan because that already put $10,000 “down”! How do I structure this deal to make their $10,000 non-refundable fee apply to the purchase price as a “down payment”?
Any and all insight would be greatly welcomed as I am very axoins to get this going.

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#462489 - 09/21/18 01:29 PM Re: Lease Option Agreements [Re: nyropist]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7948
Loc: Vermont's North-East Kingdom
I'm confused . . . . are you the Owner and trying to sell your property using this mechanism to structure a Lease/Purchase ?

I guess I don't understand your use of both of the terms: Buyer/Me and Seller/Me.

And you have already identified a Lessee/Buyer who has the money for a Down Payment; but doesn't want to make the purchase now ?

If that's the case, WHY do they want to delay the purchase and Lease instead of buying it right now ?

What's the difference between the two rental amounts . . . . the $900 per month versus the $1200 ?

I guess the same question applies to the different purchase prices of $100,000 and $120,000 . . . . with no prospect of a price somewhere in between those two amounts ?

Of Course, the $10,000 Option money is applied to the transaction ONLY if the Tenant exercises the Option and actually proceeds on to purchase the property . . . . otherwise it will have been "spent" just to purchase the "OPTION", regardless of whether the option was exercised or not.

Sometimes, the Tenants use the option just to encumber the property to prevent it from being sold to someone else, and they never intend to purchases the property themselves . . . . that's why there must be a cost associated with the deposit (purchase of the "Option to Buy", and that's why it must be made non-refundable and why it must be large enough to cause some hurt if the Tenant chooses to abandon it.

I've none a few dozen of these (maybe a hundred Owner Finances, Option to Buy, Rent to Own and Lease Purchases) and find that it's often a case of a Tenant just wanting "control" and to take the property for a year long Test Drive before really making a commitment, or attempting to negotiate a cheaper price only AFTER they have become very familiar with both it and its neighborhood.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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