In this difficult market, you may find it difficult to sell your home. One alternative to a straightforward sale is to lease the home to someone who hopefully will buy it in the future: a lease-purchase transaction (also known as “lease to own”). If you are considering such a transaction, you should hire an attorney to protect your interests and assist you in complying with landlord/tenant laws.
Leasing in general has several advantages, such as tax benefits and a regular cash flow. That said, most sellers want to sell and are not interested in owning and renting the home indefinitely.
A lease-purchase combines aspects of a sale with aspects of a lease. The buyer takes possession of the property under a lease while reserving the right to buy the home at some point in the future (an “option“). Typically, some portion of the rent is set aside to be applied toward the sale price if the buyer decides to purchase. While far from perfect (the seller, after all, is unable to sell until the buyer decides to buy), this arrangement has many advantages. For example, it encourages the tenants to remain in the property and maintain it until they eventually purchase it.
However, when you act as a landlord, you take on legal rights and obligations. It is a good idea to hire an attorney to review the documents whether you are simply leasing the house or leasing with an option to purchase. In either case, you want an agreement that will protect your interest in the house throughout the tenancy. Moreover, if the tenant violates the terms of the lease, you will probably want an attorney to assist you with the eviction process.
If you are considering this type of transaction, Marc and I can assist you in structuring the deal so that your interests are fully protected. Contact us to find out more.
