An option agreement grants the owner of the tenant option the right to purchase the property at an agreed price during the term of the tenancy or any other fixed term, also known as an “option period,” in exchange for a tax paid to the seller, called an “option tax.” Conversely, if you decide not to buy the house – or not be able to provide financing before the end of the rental period – the option expires, and you leave the house as if you were renting another property. You will probably lose all the money that has been paid up to that date, including option money and earned rental credit, but you will not be required to continue renting or buying the house. A leasing option works very similar to a lease purchase because it consists of two contracts and theoretically allows the tenant to purchase the property in the end. However, the tenant does not sign a sales contract, but an option contract (“option contract”). In a standard lease-sale agreement, both parties agree on a rental period during which the rent is paid and conditions of sale at the end of the rental period, including the sale price. Often, the contract is divided into two parts, one being the duration of the credit and the other a sales contract. The rental agreement explains what responsibility the tenant/buyer and lessor/seller assumes during the lease. This contract also includes the option fee and how much the monthly payment is credited on the down payment for the purchase of the house at the end of the lease. If you are like most home buyers, you need a mortgage to finance the purchase of a new home.
To qualify, you must have a good credit score and a cash payment for a down payment. Without this, the traditional path to home may not be an option. As soon as the above conditions are agreed, the main positions of the rental part are complete. These contracts include everything a regular lease does, plus the amount of option fees, termination details, what is paid with the additional rent, and whether the house has a fixed price or if it is sold at market value. Sometimes sellers give the option of money to their real estate agent as the full payment of the commission. Brokers are not always involved in exercising leasing options or executing leasing contracts, and you will probably still need a real estate lawyer, even if you have retained the representation of the real estate agent.