How Does Lease-To-Own Work?
Basics of a Lease Option • Buyer pays the seller option money up front for the right to later purchase the property. This payment may be substantial. • Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the lease option. • During the term of the lease option, the buyer agrees to lease the property from the seller for a predetermined rental amount. • The term of the lease option agreement is negotiable, but the common length is generally from one year to three years. • The option money generally does not apply toward the purchase price. • A portion of the monthly rental payment typically applies toward the purchase price. • Option money is rarely refundable. • Nobody else can buy the property during the lease option period. • The buyer generally cannot assign the lease option without seller approval. • If the b
