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What is a Lease Option? How does rent to own work? In this video, I talk about what a lease to own is and how they are generally structured.
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Lease with Option to Buy
A lease option (more formally Lease With the Option to Purchase) is a type of contract used in both residential and commercial real estate. In a lease-option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property but would not be contractually obligated because they have the option whether or not they want to proceed.
The Seller in a lease option is contractually obligated to sell the home if the tenant chooses to exercise the option to purchase.
How does a lease option work?
A lease option works where the buyer pays the seller option money for the right to purchase the property later at some predetermined point in the future . As for the option, the buyer and seller can agree to a purchase price at the inception of the contractural agreement or the buyer might agree to pay market value at the time the option is exercised.
What happens to the option money if I decide not to purchase?
Generally the option money that you have paid to have the option to purchase the home is non-refundable if you decide not to purchase the home.
If you have additional questions about Rent to Own or Lease to Own, please comment below or contact me directly.
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