SELLING on Lease-Option

Purchase And Sale Agreement

This package includes the following documents:

• Lease Application
• Residential Lease Agreement
• Option to Purchase
• Guarantor Agreement
• Move-In/Move-Out Checklist
• Lead-Paint Disclosure Form
• EPA Lead-Paint Brochure

This packet is used by: The Selling on Lease Option package is for property owners who wish to sell their property on a lease-option basis. The agreements are landlordfriendly and are designed to maximize the property owner’s rights. The agreements are not assignable by the tenant-buyer to anyone else. Selling on lease-option has many advantages: Tenant-buyers, in contrast with strictly tenants, are usually much more vested in the property; you can typically charge a higher rental rate; you can collect an option fee up front that is forfeited if the option is not exercised or rent is not paid on time; and you can typically negotiate that the tenant take on more maintenance responsibilities. In return the tenant gets into a home without a bank, locks in on a purchase price that could be substantially lower than fair market value at the time the option is exercised, has the potential for building up a down payment through rent credits, and has time to improve the his/her credit score. This is a particularly useful investment strategy during a slow housing market.

The Documents

Residential Lease Application

Don’t underestimate the necessity of a thorough rental application—it can be one of the most important documents in the transaction. Once a tenant falls behind in rent or damages your property, the only remedy you have after the security deposit is to begin eviction proceedings and sue in court for damages. Even if you win, the litigation can cost you more in attorneys fees than the amount your tenant owes you. And, if you get a judgment against your tenant, it can be difficult to enforce if your tenant has changed jobs and provided no forwarding address. The best way to avoid costly tenants is to effectively screen them. You are giving someone, usually a stranger, possession of one of your most valuable assets—do not be shy about requesting the kind of information about them that you need. Our Lease Application has been developed by experienced landlords and attorneys to request information and verification you need to make informed decisions about who to accept as a tenant, as well as information that will help you enforce any judgment you may receive in the event of a default.

Residential Lease Agreement

A good contract can help you win in court. A great contract can keep you out of court. Although no one, not even an attorney, can guarantee that you will win or be able to avoid court in the event of a dispute, there are provisions that can be included in a lease agreement to help minimize this risk. Our landlord-friendly lease is a powerful tool in managing your investment property. It has been developed by tough litigation attorneys and professional real estate investors, who have both extensively studied and personally lived the challenges and issues that can arise in the landlord-tenant relationship. By utilizing years of professional experience from all sides of the transaction, our lease is designed to maximize the landlord’s ability to meet these challenges.

Option to Purchase

The Option to Purchase is the agreement that grants the tenant-buyer the right to buy the property at a future date at a determined price. The option is set forth in a separate, stand alone document to reduce the appearance that the tenant-buyer has any equitable interest (as does the provisions expressly disclaiming any such interest). The price of the property might be fixed as of the date of the option, or the formula to determine the price might be fixed.

Guarantor Agreement

If a Landlord is faced with the situation of a prospective tenant that does not appear to have sufficient resources to justify leasing the property, a lease transaction can still be accomplished if there exists a third person or entity willing to guaranty payment of the amounts due under the lease. This is similar to a lender getting someone to “co-sign” on a loan. The effect of the Guarantor Agreement is that the guarantor is legally responsible to make all payments under the lease if they are unmet by the tenant.

Move-In / Move-Out Checklist

Even if not required by law, conducting a move-in, move-out inspection with your tenant present is a good idea. This document will help resolve disputes relating to the condition of the property should one arise and help to justify the retention of some or all of the security deposit upon vacancy. The move-in inspection should be conducted before the tenant moves in, and the move-out could be conducted at or very near the time of vacancy. If the move-out inspection is conducted before the tenant leaves, you may give them the option of fixing needed repairs identified or cleaning required items to reduce the amount of the security deposit you keep.

Lead-Paint Disclosure Form

Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Before renting pre-1978 housing, landlords must disclose the presence of known lead-based paint and/or lead-based paint hazards in the dwelling. An approved form has been provided in this package. The information should be carefully filled out and the tenant provided a copy. Keep a copy for your records.

EPA Lead-Paint Brochure

In addition to the Lead-Paint Disclosure Form, landlords of dwellings built before 1978 must also provide their tenants with a federally approved pamphlet on lead poisoning prevention. This Brochure is included in this packet.

Instructions and Tips

In addition to the Lead-Paint Disclosure Form, landlords of dwellings built before 1978 must also provide their tenants with a federally approved pamphlet on lead poisoning prevention. This Brochure is included in this packet