Lease With Option to Purchase
Will the Owner Consider a Lease With an Option to Purchase?
This question pops up every now and then. The single most misunderstood factor with regard to a lease with an option to purchase revolves around the following terms: security deposit, down payment and lease option payment. Usually after addressing this concern, the lease with option is no longer a part of the conversation.
When someone inquires about a lease with an option to purchase, the first question to address is “how much of an option payment are you working with?” This question is usually followed by a discussion of what constitutes a lease with an option to purchase and the conditions that are usually involved. In Alabama, the option payment is usually more significant than a security deposit and oftentimes a security deposit is required in addition to the option payment.
The option payment ensures that the seller will not sell the home to anyone esle as long as the lease option buyer has the option to purchase and has not violated the terms of the the lease option agreement.
The Lease and The Option Agreements
In Alabama, the lease and the lease with an option to purchase are usually two entirely separate documents. The second question that I get (after will the owner consider a lease with an option to purchase) is how much is the down payment? When working with a lease with an option to payment, there is no down payment. Instead there is an option payment which goes directly to the seller and does not have to be held in escrow and is non-refundable. In a true lease with option to purchase, the option payment is not applied to any future purchase as a down payment. Inquirers are usually outraged by this fact, as they have been misinformed or have been long time believers of urban legends regarding how lease options work. Down payments are associated with lease purchases. NOT lease with options to purchase.
If all you have to work with is a security deposit, then you’re not a likely candidate for a lease with an option to purchase. But if you’d like to know more, please give me a call.
Birmingham-Hoover Metro Area Rental and Real Estate
Whether you’re looking to buy real estate your sell your existing property, call or send me and email today, so we can discuss how I can best serve your Birmingham-Hoover Metro area real estate needs!
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Charita H. Cadenhead, Realtor®
(205) 527-1112 – Direct
(800) 496-7431 – Fax
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