Option Agreement for Lease With Option to Buy

What is an option agreement for lease with option to buy

An Option Agreement for lease with option to buy is also known as a Lease purchase option or a Lease Option. It gives the tenant the right so that he can buy the rental property during the lease term. The tenant is allowed to gain credit for the price of purchase for every rental payment which is done in time. However for any late payments he will not gain any credit. This form is supposed to be an accompanying form for a Residential Lease Agreement which is totally separate and should be signed by both the parties. This agreement gives you the flexibility you need for your property as an owner.

An Option Agreement for lease with option to buy is used to specify all terms and conditions in respect to the use of the property. Like any regular lease, this agreement also specifies the information regarding monthly payments or any maintenance payments or responsibilities. It specifies how the tenant can possibly purchase the property from the owner during the lease period. It can also be added if this option to purchase expires or not with the lease period. Like any other legal document it should have the details like the names of both parties, the address of the property, the period and dates of the lease, the monthly payments, the purchase price of the property, in case the owner credits a certain amount of the rent to the purchase price – that is mentioned. Also the maintenance responsibilities should be mentioned. It is recommended that an inspection checklist is also accompanied for convenience sake.

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    OPTION AGREEMENT

This option to purchase is made in connection with the lease dated __________________ covering the property at ________________________________________________(“Property”), between ______________________________________________________________(“Tenant”) and ___________________________________________________________(“Landlord/Property Manager”).  The Tenant hereby purchases an option to purchase the Property at any time between ________________ and _________________ .  Of the $_____________ monthly payment, $________________ will be a NON-REFUNDABLE option payment that will lock in a purchase price of  $___________________ should the Tenant wish to exercise his option to buy the property.  In addition, the Tenant will pay a beginning NON-REFUNDABLE option payment of $______________ upon execution of the lease agreement.  In order to exercise the option, Tenant must give written notice to Landlord before ____________________.  If Tenant elects to exercise the option, closing must occur on or before ______________________.  Tenant understands that failure to exercise the purchase option, a declaration of bankruptcy or any act of bankruptcy, or default by Tenant in any of the provisions of the Lease, will result in cancellation of this option agreement, and that ALL OPTION MONIES WILL BE FORFEITED BY TENANT.  Tenant’s right to exercise the option is subject to the Tenant being in compliance with all the terms of the Lease.  Upon exercising the purchase option, Tenant agrees to pay all points, if any, and all closing costs.  If Tenant elects to exercise this Option, Landlord reserves the Right of First Refusal to provide financing to Tenant.

Tenant acknowledges that Landlord makes no warranties as to the condition of the property and has advised they may want to have a licensed real estate inspector evaluate the property, at the Tenant’s expense, prior to signing this agreement.  Tenant hereby accepts the property “AS IS” and is responsible for and allowed to make any and all repairs to the property.  Tenant will obtain written approval in writing from Landlord prior to making any improvements to the property.  All repairs and improvements must be made in compliance with all building codes, deed restrictions and zoning laws applicable to the property.  Tenant is not allowed to change the floor plan or construction of the property in any way or to change or alter the intended general use of any or all rooms or the garage without express written approval of the Landlord.  Also, Tenant may not add any additional structure(s), either attached or unattached to the existing structure, without express written approval from the Landlord.  Tenant agrees that any improvements made become a part of the property and shall remain with the property if Tenant elects not to exercise his Option to Purchase.
Special Provisions:______________________________________________________________

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Tenant                                                                    Landlord/Property Manager

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Tenant

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