Specific Lease Option Form
Anyone know where I can get the forms for a L/O? I checked the forms on this site, but the option form says I need to refund the option money to the buyer for the down payment later. If there is a form that allows me to put the option money towards the purchase price. Also, I need a clear understanding of the monthly rent credit I would give in the agreement. Thanks in advance.
I would think putting the cash toward the down payment would be more useful than deducting it from the sale price. Most mortgage companies like to see a large down payment, so it would be easier for the T/B to get a mortgage when s/he is ready to purchase. Either way, the money is still going to close the house, just make sure it is non-refundable in case they decide to move out.
-Chris
[addsig]
I did a search on line, and came up with some good pre-made forms, for my specific state, about $12-$20, one for the lease agreement, one for the purchase option. (from everytihng I have read, you want two separate agreements with your tenat buyer) I can't post links, but suggest you do a search in google or yahoo, for "lease option form hawaii" or purchase agreement form hawaii" to find some state specific forms. The ones I found are editable too, so you can change the language to fit your needs.
Hope that helps - Mike
This L/O form will need your preferred tweaks and legal review when your finished.
In the Addendum, decide if you want the payment book comment. You may want to remove it, possibly replace or just add "X dollars will be full payment for seller's equity" statement (ala Peter Conti and David Finkel's book-I haven't seen their L/O forms, though. This one is a blend with good coverage and simple, modern language. The monthly $200 repair cost comment is a nice touch appreciated by future sellers/current optionors.
After exercising option, you keep additional equity build-up with the Conti/Finkel statement. You explain it to seller as a natural effect of you making all the additional payments.
What else will you need?
A Memorandum Of Option (which you record in Recorder's Office. That's two documents. You'll need two more.
A residential lease for your tenant stating the NON-assignment of the contract (no sub-subletting).
Fouth, a strict Option Agreement, with the renter-to-own, that does not end up at recorder's office but stays with you.
Good Cheer!
Alan
_______________________________
RESIDENTIAL LEASE WITH OPTION TO PURCHASE AGREEMENT
This agreement dated ________________ is by and between Seller/Landlord _____________/Owner of Record and Tenant/Buyer and/or Assigns the dwelling located at______________________________________ in the State of__ ________ in the County of___________________under the following terms and conditions:
1. Fixed-Term Agreement (lease): Landlord/Seller leases to Tenant/Buyer agree to lease this dwelling and all appliances, fixtures, for a fixed term of ____ months, Starting ______________ and ending _____________.
2. Rent: Tenant/Buyer agree to Lease this dwelling for the sum of _________ per month. The first months Lease is __________ and is due on or before the first day of every month. The Tenant/Buyer will be responsible for late charges if monthly payment is not made on time as outlined in the Seller/Landlord’s mortgage agreement. The Tenant/Buyer shall pay the Landlord/ Seller $25.00 for each monthly Lease payment not received within 10 days of the due date.
3. Option to Purchase: It is mutually agreed that the Landlord seller grants the Tenant Buyer an exclusive right to purchase the above property at any time during the term of the agreement for the sum of $___________________ It is agreed that option consideration of ____________ was paid on ___________.
4. Tenant buyer agrees to properly maintain home and be responsible for minor repairs under $200.00 Landlord/Seller agrees to cover any repair over $200.00.
5. Right of assignment: Landlord/Seller agrees to grant Tenant buyer the Full and complete right of assignment on the above property. Tenant buyer shall have the right to sell, rent, Lease-option sublease, list the property with a real estate firm, place For Sale signs, and/or assign this agreement without the approval of the Landlord/Seller.
6. Notification of Serious Building Problems: Buyer/Tenant agree to notify the Seller/Landlord immediately upon first discovering any signs of serious building problems such as a crack in the foundation, a crack in the plaster or stucco, moisture in the ceiling. Leaky roof, leaky water heater or termite activity.
7. Damage: Buyer/Tenant will be responsible for all damage with the exception of ordinary wear and tear.
8. Insurance Considerations: Landlord /Seller shall protect Tenant/Buyers interest in the home by maintaining Property insurance upon the property, naming the Tenant Buyer as additional insured. In the event of any claim being filed, Tenant Buyer has the right to proceed to closing and accept the insurance proceeds for said damage.
9. References In Wording: Plural references made to the parties involved in this Agreement may also be singular and using references may also be plural. These references may also apply to Owner’s and Tenant/Buyer’s heirs, executors, administrators or successors as the case may be.
10. Entire Agreement: As written, this Agreement and the addendum constitutes
the entire agreement between Buyer/Tenant and Seller/Landlord. They have
made no further promises to any kind to one another nor have they reached any
understandings either written or verbal.
11. Attorney’s Fee: If either party to this agreement shall bring a cause of action
against the other party for enforcement of the agreement, the prevailing party
shall recover reasonable attorney’s fees involved.
12. Intent: It is the Intent of the Landlord Seller to sell the premises to Tenant/Buyer. It is the intent of the Tenant Buyer to purchase the property Option: To exercise the option, Buyer/Tenant should notify Seller/Landlord in writing within 5 days of exercising the option.
13. Encumbrances: The Seller/Landlord will convey marketable title to the
Buyer/Tenant upon payment of the full consideration required herein.
14. Escrow: Escrow shall be opened with ___________________ Title. Escrow
instructions will be issued and a memorandum shall be recorded.
15. Prorations, Closing Costs, Assumption and Refinancing Costs:
(a) Real Property Taxes on the property and general and special assessments if any for the fiscal year shall be prorated to the close of escrow and paid by the Seller/Landlord.
(b) The “closing costs” shall be those costs incurred in conjunction with closing escrow and shall be paid at the close of escrow as follows: 50/50 between Seller/Landlord & Buyer/Tenant.
16. Time: Time is of the Essence in this Agreement.
17. Modifications: Any modifications of any portion of this agreement must be made in writing signed by both parties.
18. Preparer’s Disclaimer: All of the undersigned parties in this agreement agree not to hold the preparer of this document liable for any errors, omissions, mistakes or negligence.
20. Acknowledgement: The undersigned Seller/Landlord hereby acknowledge that they have read this agreement and the attached addendum and have been given a copy. They further have been advised to seek legal tax, technical expertise and any other counsel of their choosing concerning this prior to signing.
21. Addendum:
• ________________________ is responsible for providing Tenant/Buyer with current payment book for mortgage. Tenant/Buyer is responsible for making payments directly to mortgage company.
Acknowledgement: The undersigned Parties here by acknowledge that they have read this Agreement, understood it, agreed to it and have been given a copy. They further have been advised to seek legal, tax and technical expertise counsel concerning this contract prior to signing.
________________________ _________________________
(Landlord/Seller) Date (Tenant/Buyer) Date
________________________ _________________________
(Landlord/Seller Date (Tenant/Buyer) Date
[ Edited by fearnsa on Date 03/25/2004 ]
C-Brainard,
the only problem with that is that I'd have to come up with the money when the T/B decides to exercise the option. If I put the option money towards the purchase price, I won't need to come into the closing with their cash. Or is there a way around that? Thanks for the info everyone. If anyone knows a specific site, please send me a PM.