With the state of the economy and how the housing market has been, some of my sellers have approached me with this question concerning Lease/Options or Lease/Purchases.
3 Things to Consider on a Lease/Option or Lease/Purchase:
1. "There are many complex issues to be addressed" and there are no standard contracts for these issues; therefore, a Real Estate lawyer needs to be involved.
2. Thorough background and credit checks must be done on the potential tenant so you know that their money woes won't bite you.
3. Being locked in on a purchase price when you do not know the future of the real estate market. You have a 50/50 chance of loosing or winning out on the deal. Not only that; on the Lease/Option you have a 50/50 chance of them accepting the contract.
What is the difference between a Lease/Option and a Lease/Purchase?
Lease/Option is when the tenant leases the property for a certain period of time and then has an option to buy the property or move out. A Lease/Purchase is when the tenant leases the property for a certain period (similar to the option but here is where it differs) and then has to purchase the property by a certain time period. There is NO out for the tenant/buyer at that point. They have to buy or be in breach of contract. Yikes.
What does a Real Estate Lawyer say about Lease/Options or Lease/Purchases?
Joseph J. Barone, President of Talon Title Agency of Central Ohio, Inc. sent me this document for my clients to consider when approachng this subject.
I'll quote from the attached document and leave you with this last thought… "These transactions are not for the faint of heart."