Posted by Jack on September 11, 2006 at 16:43:03:
If you want to lease/option set up a regular lease at market prices or slightly above and a separate Option that coincide, usually one year, so you may change anything at the end of the year for any successive lease/option. If you want to include the right to a second or successive years, make sure you include the fact that the new option amount and lease amount will be as agreed by both buyer and seller. Determine an option amount usually around 3% to 5%, especially on a pricy house and in the option only, state the full amount up front and amount that may be applied to the down payment or purchase amount. Also state that all provisions of the lease must be complied with and that the option amount is non-refundable unless the option is exercised. You may also state the additional amount that may be applied monthly if paid on time. Do not cross reference anything in the Lease to the Option. Include a security deposit amount in the lease and what it will cover. Lease/Option has several advantages to both parties and in my opinion is preferrable to a agreement for deed, to which you are forever tied and have to foreclose to get it back. Any questions?