Lease option is a contractual agreement between a seller and buyer that
allows the buyer to rent a property as they save money for a down payment or
while improving their credit. The buyer locks into a future purchase price and
agrees to buy the property within a reasonable amount of time. Buyers and
sellers should obtain a lease option agreement and establish the following
terms:
Future Purchase Price
Maximum Length of the
Agreement
Monthly Rental Price
Some sellers place a clause in the lease option agreement requiring buyers
to pay a penalty fee if they decide at the end of the term not to purchase the
property. In addition, if a percentage of the buyers monthly rent was being
held in an account to assist with their down payment, the seller has the right
to refuse refunding this money. Lease options are ideal for both buyers and
sellers. Prior to signing a lease option contract, both parties should have the
forms reviewed by a real estate attorney.