The money in the option is not refundable. No one else can purchase the property unless the buyer is late and the buyer generally cannot give up the lease without the seller`s consent. Buyers are often responsible for the maintenance of the property and the payment of all expenses related to its maintenance over the life, including taxes and insurance, and are contractually required to purchase the property. For the first time in the late 1970s and early 1980s, leasing option sales became popular financial instruments and were primarily used as a means of circumventing mortgage disposal clauses. But they also have other advantages. Supporters argued that the sale was not a sale because it was a lease agreement, but the courts argued differently. If you have any questions about the lease purchase, leasing option or real estate transaction, please contact us. The lease option and the rental option create owner-tenant relationships. Therefore, if the tenant is late, the owner-seller would evict the tenant buyer or the owner of the tenant option as a normal tenant. One problem that may arise in the context of evicting a tenant from a leasing or leasing option is a Fair Interest Claim. Although there is generally no success, a tenant may claim a shareholding in the property in question, based on the idea that a lease-purchase or leasing option essentially amounts to a sale, similar to a payment contract (or deed contract), with the seller retaining ownership of the property as collateral until the balance is paid by the buyer. If a fair interest argument prevails, the landlord-seller is required to remove the tenant through legal action, as opposed to an easier evacuation. A landowner can enter into a lease because he or she has had difficulty selling the house directly.
This option can make the property more attractive to different types of potential buyers. As is the case in the lease, the option fees and accumulated rental credit are not refundable if the tenant/buyer decides at the end of the tenancy agreement. The tenant/buyer is exempt from the responsibility of the sale and the owner/seller is responsible for finding new tenants. It is important to calculate the exact amount to be paid to the landlord at the end of the leasing option. Keep in mind that the owner removes the home from the market and forgoes any benefit from the market value of the home by taking the rental option. The owner will want to be properly compensated because he cannot sell the house to another person who was willing to buy it. 6. An investor can acquire a property in difficulty with a rental option and make improvements to the property. The investor can then sell the option to a buyer willing to pay the new market value for a profit.