Lease Option vs Lease Purchase on a house???

Question

Can someone tell me the difference between a lease option and lease purchase of a house? What are the pros and cons of each? What is basic contract like?

Answer 1

Whatever you do, make sure that the seller owns it free and clear or that payments are in cooperation with the seller's lender so payments go towards their loan.

I have heard too many stories of people making payments for some time, the person keeps their money, and the property is foreclosed.

I am not an expert, but for lease with option to buy you would be paying rent with an option to buy later at a specified price, and lease purchase would apply some or all of your rent towards agreed upon purchase that would close at a later date.

Answer 2

Lease option:

During the term of the lease option, the tenant pays rent to the landlord, and in exchange is permitted to occupy the property. At the end of the contract, the tenant has the option to purchase the property outright; the tenant would typically obtain the money to do this using a mortgage. In exchange for this option, the tenant pays extra money to the landlord, in excess of usual market rent.

Lease Purchase:

A type of delayed closing. The lease purchase contract sets the closing date and provides remedies to the seller if the buyer defaults.

http://www.househitz.com

Answer 3

Legally there is a difference. In real life there is no difference. Lease with option means that you have 12 months to decide.  If you decide not to buy the house, the seller keeps the option money ($1,000).  You are free.

Lease Purchase means that you promise to buy it in 12 months. No option.  YOu will pay the price and close in 12 months.  Of course, what always happens is..... the same thing that kept a buyer from buying on Day 1 never goes away. 12 months later the same problem remains. A seller can't force you to buy the house if you can't get a loan.  SO it is the same as an option.  You lose your "upfront" money.

The basic contract is a lease.  Available at any bookstore. /