How do a lease to own deal work?

Question

I have an acre lot that I want to sell. Someone wants to buy it, lease to own. How would that legally work?

Answer 1

Bob,

        Your prospective purchaser is simply turning you into a bank to finance the purchase.

         A lease to own sets a fair market rental value on the subject property plus a surplus to apply towards the purchase price.

         This can be done over 30 years....or over 30 years all due in 5 years requiring the buyer to refinance or risk losing his investment, including any improvements built on the property.

         You are in a position to negotiate whatever you find acceptable. Make absolutely certain your agreement is in writing and professionally drafted to protect yourself from inadvertantly shooting yourself in the foot.

          You can ask to be paid monthly, evry six months or annually. If your agreement is violated understand that courts are much less sympathetic to lease-sale agreements than straight leases. They will not automatically kick out a tenant who claims and possesses a partial real estate interest in and to the property. MUCH HARDER TO OBTAIN AN EVICTION. TAKES MUCH MORE TIME. COSTS MUCH MORE MONEY. In many cases it is not worth it.

        Consider just putting a trust deed on the property and sell it outright. YOU LIKELY WILL BE ASKED TO TAKE A SUBORDINATION TO A CONSTRUCTION LOAN and a permanent take-out loan.... REFUSE UNLESS YOU ARE WILLING AND ABLE TO WALK AWAY WITHOUT NOTHING.

Good Luck.