Basically, it is an agreement between the owner and renter to rent yhe subject property with the understanding that it can be purchased according to a previously arranged agreement that itentifies the terms involved.
It means that the owners of the property are open to a lease on the property with the option to purchase it later. Many times people with some money, but don't have good credit, would like to get into a home. Without good credit, they aren't able to get a mortgage to secure the property. However, if you are able to lease it, and once your credit improves, then you have the opportunity to purchase the property. Does that make sense?
The Hayley Group, Keller Williams
Typically the tenant will enter into a lease agreement plus an additional agreement to have the option to purchase the property in the future. This does not mean the tenant is obligated to purchase but can using the terms agreed to at the start of the agreement. This option comes at a price; I've seen 5% of the sales price to be the average and will typically go back to the tenant (buyer) if they purchase the property. Some landlords will also credit a portion of paid rents towards the purchase price too. If the tenant does not go forward in purchasing the property within the time limit of the option period the option fee and any rent credits will be forfeited by the tenant. The option term can be extended by paying a new option fee.
The lease option (also known as lease to own) is best suited for areas where there is rapid value appreciation or when a buyer wants to secure the property to live in but needs a little more time to improve their credit or build up a down payment.
For a lease option contract to be legally binding in Texas the tenant must purchase the property within 6 months of executing the option agreement. However, so long buyer and seller agree they can do whatever they want and extend it as long as both parties are willing. After 6 months however should a dispute arise over the situation the courts would most likely void the agreement. As licensed real estate agents, Realtors must tread carefully thru these situations and most will run and hide.
Nora, this will be the 5th question you've asked and Iâ€™ve answered here. I encourage you to e-mail me directly with all future questions. Best of luck!
Mike Gonzalez, REALTORÂ®
Listing Specialist / Buyer Representative
Keller Williams Dallas Northwest
(214) 783-4240| MikeTX@kw.com
It means the seller might allow you to lease as long as you also agree to purchase the property.
We don't suggest this any more as the Texas legislature has essentially outlawed this arrangement. There are people who advertise it and try to work around the law, but the good attorney's I know say don't do it. Both buyer and seller are at significant risk in many cases.
If you are not ready to buy, then lease, but don't mix the two.
Sounds like you've gotten your question answered. I'm way over on the east coast in Prosperity, South Carolina, but short answer - if you are looking to rent, rather than purchase - go elsewhere and just lease, you generally won't have to put down so much up front...
Specialist in Land & Investment Properties
There are many tips never enter into a lease purchase unless you have a realtor who represents you. We worked with many families regarding this type of purchase.
HERE ARE A FEW BASIC FACTS:
Buyer and seller agree on a purchase price.
During the term of the option, the buyer agrees to lease the property from the seller for a predetermined rental amount.
The term of the lease purchase agreement is negotiable, length is one year to three years, at which time the buyer applies for bank financing and pays the seller in full.
Option money is nonrefundable.
Nobody else can buy the property unless the buyer defaults.
Buyers are often responsible for maintaining the property paying all expenses associated with its upkeep, including taxes and insurance.
.If the buyer defaults, sellers do not refund any portion of option money and may retain the right to sue for specific performance.
CONTACT OUR OFFICE TODAY
Lynn A. Crosby ~ National Featured Realtor
"...Specializing in Residential, Commercial Properties and Loans..."
Dallas Realtor -
The Michael Group "Dallas Business Journal 08' list top realtors"
Dallas Loan Officer - Homewise Lending
Dallas Real Estate Website: http://www.lynn911.com 60,000 listings Dallas homes for sale
Surely! It depends on the seller. Is it also for sale? If it's an investor, they are usually looking for someone to purchase. If it is your garden variety seller, they may be looking for any way out of the property that's available.
terri.h @ kw.com
The Hayley Group, Keller Williams
A lease/purchase means that the property is available for lease with the buyer/tenant purchasing the property at the end of the lease period. Depending on the terms of the contract, a portion of the lease may be applied to the purchase price. In Texas, these agreements must be handled with a Contract for Deed. This instrument differs from lease purchase agreements in other areas of the country. The state legislature modified the use of lease purchase agreements several years ago to prevent abuse of buyer/tenants by landlords. A contract for deed must be written as an addendum to a real estate sales contract and since there is not a state approved form, these agreements require an attorney to prepare. Choosing an attorney with experience in this type of contract is extremely important due to the disclosure and reporting requirements of a Contract for Deed. The only reason that a seller would consider a lease/purchase is to attract buyers who may not be able to qualify for financing now, but could qualify in a year or two at the end of the lease. In a buyers market, we are seeing more of these deals. However, more often than not, the seller ends up owning the property at the end of the lease because the buyer still can't qualify for financing.