What do Lease Option Agreements Consist of?
A Lease Option agreement is usually two separate agreements between the parties: a Lease and an Option Agreement. The Lease Agreement is a fairly standard rental agreement. The Option Agreement is a purchase/sale agreement whereas the tenant/buyer has the exclusive right to purchase the house for a specified price and term. The price of the home may increase if the Option Agreement has a term of many months or years. The seller cannot sell the house to anyone else as long as the Option Agreement is present. The tenant/buyer leases the house for a specific monthly rent and term. Part of the rent may or may not be applied to the purchase price. The Earnest Money Deposit (also called an option fee), price and terms of the sale are in the Option Agreement. The Lease Agreement usually has a default clause. If the tenant/buyer does not pay the rent as agreed in the Lease Agreement, the Option Agreement is null and void, and the Earnest Money Deposit is forfeited by the tenant/buyer. Lease Op
