What is a Lease Option?
A lease option is another avenue for families to use to achieve the purchase the home of their dreams. It is also a vehicle for a home owner to sell their home without incurring the fees of a traditional sale and also place a superior tenant in their home, one who has pride of home ownership. Owners, also known as the Optionor and the tenant/buyer (The Optionee) enter into a purchase agreement along with a rental agreement. The length of the contacts can be any length of time but 24-36 months is the average length of time before the tenant buyer purchases the home. The sales price is secured at the beginning of the contracts. The tenant buyer puts down an “Option Consideration” this money will be applied towards the down payment of the home. As the tenant/buyer pays rent each month they will also receive monthly a rent credit that will be applied towards the purchase of the home. Rent credits vary from owner to owner. The purchase contract has been completed at the beginning of the contract, when the tenant is ready to purchase the home, just as with any purchase, the tenant contacts a lender, L.O.O.C can refer you to a lender also, and what ever money that you put down you will get credit for, (for example, if your option consideration was $15,000.00 and you have $3,000.00 in rental credits, =$18,000.00, you down payment requirement will 20%, or 15% or whatever it is that the tenant qualifies for minus the $18,000.00). All contracts, Purchase, Option, and Lease Agreement will be done on C.A.R forms, (California Association of Forms). There will be addendums and disclosure that make the terms of the contracts clear, once the the contracts expire, then you become a month to month renter unless you get an extension.
DeMylon Vinson #02024681