What is the meaning of a lease option in a rental contract in USA?

Question

We are looking to sell our home in Orlando, FL. A prospective tenant is seeking to rent the home for $ 1700 per month for one year with a "lease option" to buy at $425,000, which is amount we wish to sell the home for at this point in time.
We live in the Middle East and do not understand the word "lease option".

Answer 1

the lease option means you have the option of just leasing it as apposed to buying the property, if you choose to lease and also buy there is ussually an amount of you lease that can be applied tward you purchase . expl $1700 month and they will use $ 200 of that tward your down pmt which helps alot also if your not interested you can get the landloard to lower the amont for you by negotiating.
good luck

Answer 2

Lease options can be tricky, usually the person wanting to do a lease option has something wrong with their credit now, or they don't have money they need for a down payment. That's why they can't buy now.

They need to fix something in their finances before they can afford to, or be credityworthy enough to actually qualify to buy your home.

In the past , in my opinion the lease option was NOT a good idea for a seller, you see, you have to agree on a price now, so, say in 1yr. the "tenant" exercises their option to buy & you agreed on a price of $425K, but not the market is better & you could be selling for $475K, now you're the one who is losing.

However, now in the softer market that is being experienced throughout the country, it's not such a bad idea to do the lease option with a "tenant". You may agree on the $425K price now & then in 1yr when the tenant exercises their option to actually buy, your home may sell for only $400K on the open market, therefore you WIN

However, you also need to make sure the home will still appraise for $425K in 1 yr. & you won't know that until the time comes to exercise the option.

I guess the best part about doing the lease option is typically you will get more UP FRONT money. Known more commonly as "OPTION MONEY". Aside from what a tenant would normally pay to "get into" a regular lease (1st month, plus a security deposit) the "tenant" who wants to enter into a lease option agreement with you, will also be giving you this option money, on a $425K house, this should be at least $10,000.

If they don't have option money, at least in the amount stated above, don't bother doing a lease option, just rent your home for 1yr., then after that yr, see if you want to sell (regular sale)

The Option money ($10,000) is NON REFUNDABLE, it's "at the tenant's risk", SO if the tenant decides NOT to exercise the option to buy, they lose their $10K.

The Option Money is the Tenant's "good faith" that they think they will be able to resolve whatever is bad, on their credit & that they will be able to save the money needed for their down payment within that 1yr. If they can't resolve those issues, they lose their $10K

so, right now, you potentially should be making $10K up front for the option, $1700 for 1st mo. rent, plus $1700 for security deposit.

hope this helps

Answer 3

It simply means that the tenant can purchase the home at any time during the term of the lease for the agreed price.

The contract would usually include an "option fee" which is a non-refundable deposit towards the purchase price, typically .5% to 1% of the purchase price. If tenant exercises the option, the fee is used as part of their down payment on the house. If they don't exercise the option before the contract expires, they lose the option fee and you get to keep it.

Sometimes the contract will provide that a portion of the rent will be applied towards the down payment on the house. Typically that would be about 5% to 10% of the agreed rent.

There are no hard and fast rules on the numbers. Just get your agreement in writing and have your attorney review it before you sign anything.

Answer 4

Lease option is for lease purposes only. What it means is that at the end of the lease they have the option of extending a lease. That option has to be exercised at least three months in advance. and both parties to agree on. The option to buy that property can also be added and quite in advance before the lease expires. so that you have enough time to advertise for lease or try to sell it. Send me an email if you need more help.

Answer 5

in case you destroy the hire you will directly lose your deposit and be to blame for the hire in the direction of the unique hire term or until the residence is re-rented (which ever comes first). you will additionally be on the hook for any damages left in the back of, yet that should be the case besides yet this time you ought to not place self belief in the deposit to cover them. as a consequence your landlord might sue you. And in case you probably did not furnish a forwarding address you won't be notified of the courtroom date (not a valid protection) and the owner ought to get real imaginitive with damages increasing the finished quantity owed. The judgment might stay on your credit checklist until resolved and in some jurisdiction enhance with interest. All destiny landlords might see this on your credit checklist and particular deny you any destiny condo as a consequence. maximum all renters hire on 12 month leases. you ought to ask your self the style you lifestyles might substitute from 6 months to 3 hundred and sixty 5 days and why you may desire to bypass away? This time of year is the best for making a transition to a clean place as residences substitute into obtainable in the spring (decrease call for) and all get taken with the aid of the previous due fall, for that reason you won't have any ideas in 6 months to bypass everywhere else. nevertheless I understand having dedication themes, and if that maintains to be bothering you, perhaps this residence isn't the splendid one for you. And particularly you ought to hunt for out a landlord who basically rents month to month. They exist, yet they're many times not as incredible.