When Buying on Lease Option

LEASE OPTION AGREEMENT 

 

 

THIS LEASE OPTION AGREEMENT is made and entered into this _____ day of ____________, 20_____ by and between __________________________, hereinafter referred to as “Landlord/Seller” and __________________________, hereinafter referred to as “Tenant/Buyer”. 

 

1. LEASED PREMISES: Landlord/Seller, in consideration of the rents to be paid and the covenants to be performed by Tenant/Buyer hereunder, herby leases and options to Tenant/Buyer and Tenant/Buyer leases and options from Landlord/Seller for the term and subject to the covenants hereinafter set forth, the dwelling located at:

______________________________.

 

2. DEPOSIT AND OPTION CONSIDERATION: Tenant/Buyer has paid the sum of $____________ as a deposit to be credit towards the Tenant/Buyer’s down payment on the purchase price at closing.

 

3. RENT: The rent hereunder shall be:

 

[ ] A payment equal to the mortgage payment(s) as described in paragraph 13 and due by the due dates thereunder. Tenant/Buyer also agrees to pay for all future taxes, assessments and insurance on the property during the term of this Lease Option. Tenant/Buyer understands that these payments may change from time-to-time and agrees to be responsible for and pay such amounts and to be responsible for any late charges incurred due to Tenant/Buyer. Tenant/Buyer shall provide Landlord/Seller proof that all such payments due have been paid upon Landlord/Seller’s request. Upon such time Tenant/Buyer shall payoff said mortgage or trust deed prior to the expiration of this Lease Option, Landlord/Seller shall deliver a general warrantee deed to Tenant/Buyer as specified herein.

 

[ ] A regular rent payment in the amount of $____________, due by the ______ day of each month in advance. Tenant further agrees to pay a late charge of $____________ plus $____________ for each day the entire rent is not received by the Landlord/Seller regardless of the cause, including dishonored checks, time being of the essence. An additional Service Charge of $____________ will be paid to Landlord/Seller for all dishonored checks. Payment of rent may be made by check until the first check is returned unpaid.

 

The first payment by Tenant/Buyer to be made starting the _____ day of ____________, 20_____.

 

4. RENT CREDIT: An amount equal to $____________ shall be credited towards the Deposit And Option Consideration hereunder from each regular monthly rent payment paid. Any money paid over and beyond the regular rent payment, not including court costs, attorney fees and other penalties, shall be applied to the Deposit And Option Consideration. If Tenant/Buyer is leasing the property for an amount equal to the mortgage payments due on the property and there are no additional monies due to Landlord/Seller at closing, this Rent Credit shall not apply.

 

5. TERM: The term of this lease shall be _____ months, commencing on the _____ day of ____________, 20_____and thereafter until the _____ day of ____________, 20_____at which time this Lease Agreement shall terminate. 

 

6. RENEWAL: Tenant/Buyer shall have the right to renew this Lease Options Agreement for _____ additional terms of twelve months each upon 30 days notice to Landlord/Seller prior to the expiration of the then current term.

 

7. REPAIRS AND MAINTENANCE: Tenant/Buyer shall be responsible for:

 

[ ] Repair costs not to exceed $150 per incident and $500 per year.

[ ] All repair costs.

 

8. PURCHASE PRICE: The Purchase price of the leased property together with all appliances and fixtures shall be:

 

[ ] $____________, less Rent Credits and monies paid towards the Deposit And Option Consideration by Tenant/Buyer.

 

[ ] Balance of the mortgage and liens as stated in paragraph 13 at the time of closing.

[ ] In addition to the balance of the mortgage and liens as stated above, Tenant/Buyer agrees to pay Landlord/Seller $____________ at closing less all Rent Credits. This money is in addition to the Deposit And Option Consideration initially paid upon the execution of this Lease Option Agreement.

 

9. CLOSING COSTS:

Buyer Will Pay:

[ ] Recording fees [ ] Note stamps [ ] Intangible tax [ ] Credit reports [ ] Loan transfer and assumption charges [ ] VA funding fee [ ] Loan origination fee [ ] Loan insurance premium 

[ ] Loan discount not to exceed______ [ ] Transfer Tax [ ] Wood Destroying Organism Report 

[ ] Appraisal [ ] Survey [ ] Title Insurance Policy _____________

[ ] All Normal Closing Costs

[ ] Other_______________________________________________

 

Seller Will Pay:

A. [ ] Transfer tax [ ] ____________ Title insurance policy [ ] ____________ Attorney’s fee [ ] Real estate brokerage fee [ ] Loan discount not to exceed _________ [ ] Satisfaction and recording fee [ ] Wood destroying organism report [ ] Appraisal fee [ ] Survey

[ ] All Normal Closing Costs

[ ] Other_______________________________________________

B. All other charges required by lender which Buyer is prohibited from paying by law or regulation.

 

10. PRORATIONS: Tenant/Buyer shall be responsible for paying all property taxes, assessments, and insurance subsequent to the _____ day of ____________, 20_____. The following items shall be prorated at closing: ______________________________________ 

 

11. DELIVERY OF TITLE AND TIME FOR CLOSING: Landlord/Seller does hereby certify and represent that they have the legal authority and capacity to convey the property with all improvements.

[ ] At the time of closing, Landlord/Seller shall deliver marketable title to the then Tenant/Buyer by General Warrantee Deed, in fee simple, free of all encumbrances except for restrictions and easements of record, at a closing agent of Tenant/Buyer’s choosing within 60 days of Tenant/Buyer’s notification of exercise of the purchase option. 

[ ] To secure performance of this agreement, all documents necessary for the transfer of title shall be executed within 30 days of the execution of this Lease Option, and held in escrow with an escrow agent chosen by Tenant/Buyer, such costs to be borne by [ ] Tenant/Buyer [ ] both parties.

 

12. ASSIGNMENT:

[ ] Tenant/Buyer shall have the unqualified right to sublet the property and/or to assign, transfer, pledge or otherwise convey any or all rights or interests which the Tenant/Buyer may have in the property or in this Lease Option Agreement. Any such assignment or conveyance shall release the original Tenant/Buyer from liability and substitute assignee in Tenant/Buyers place.

[ ] Tenant/Buyer shall not have the right to subletting or assignment.

 

13. FURTHER ENCHUMBRANCES: Landlord/Seller warrants that there are no other liens or mortgages against the stated property other than as herein stated:

 

(A): First mortgage for the approximate balance of $__________ payable to ______________________________. The monthly payments are currently for the amount of $__________ due by the _____ day of each month, after which there is a late charge of __________. Taxes and insurance [ ] are, [ ] are not, escrowed by lender.

 

(B): Real estate taxes for the year 20_____ for the approximate amount of $__________.

 

(C): Additional Liens: ________________________________________________________.

 

Landlord/Seller agrees not to lease, option, transfer, assign, or otherwise convey to another party, any interest in the stated property. Nor shall Landlord/Seller further encumber or allow any encumbrances to become against the stated property. All third parties are hereby put on notice that any leases or assignments by the owner, liens, options, mortgages or any other conveyances, or transfers occurring subsequent to the date of this Lease Option Agreement are hereby declared by the owner to be null and void and not of force or effect. The Landlord/Seller further agrees to keep all mortgages, liens, taxes, and other encumbrances on the property current and in good standing. Tenant/Buyer shall have the right to make payments on the same in the event that Landlord/Seller becomes delinquent or otherwise defaults thereon. Such payments by the Tenant/Buyer shall be first credited against the rent payments to be made by Tenant/Buyer and then against the purchase price of the property.

 

14. TITLE SEARCH: Tenant/Buyer shall immediately order a title search. Such cost shall be borne by the Tenant/Buyer unless it is discovered that the Landlord/Seller does not have marketable title or that there are further encumbrances not disclosed and listed under this agreement, in which case the Landlord/Seller will reimburse Tenant/Buyer for all expenses associated with the title search and Tenant/Buyer will have the option of to void this agreement.

 

15. INSURANCE: Landlord/Seller agrees to maintain current hazard insurance on the property, unless otherwise the responsibility of Tenant/Buyer under Paragraph 3. The current insurance provider is ____________________________________________________________. Said policy expires on the _____ day of ____________, 20_____. The previous amount charged for this policy was $__________. Tenant/Buyer hereby understands that said insurance policy may not cover the Tenant/Buyer’s personal property. Landlord/Seller shall amend said insurance policy to reflect Tenant/Buyer as additionally insured.

 

16. DEFAULT: In the event of default by Tenant/Buyer of any covenant within this Lease Option Agreement, Landlord/Seller shall have the right to reenter and possess the property. 

 

17. BINDING EFFECT: This Agreement shall be binding upon the parties hereto and their respective heirs, administrators, successors, and assigns.

 

18. ENFORCABILITY: The undersigned parties acknowledge that they have read and understand all of the provisions of this agreement. Should any provision of this Lease Option be found to be invalid or unenforceable, the remainder of the Lease Option shall not be affected thereby and each term and provision herein shall be valid and enforceable to the fullest extent permitted by law. 

 

19. ADDITIONAL PROVISIONS:

 

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_________________________________ _________________________________

Landlord Date Tenant Date

 

 

_________________________________ _________________________________

Landlord Date Tenant Date