Lease Options Questions Q. What is a lease option?
A. A lease oprion is a contract whereby the lessor/seller agrees that in return for a non-refundable deposit, the lessee/buyer has the option of buying the property at the end of the lease period. Generally, some of or all of the deposit and payments made under the lease are applied to the purchase price should the lessee/buyer at the end of the lease decide to exercise the option to purchase the property.
Q. Why use a lease option instead of buying?
A. Many people are unable to obtain financing for the purchase of a home. A lease option permits persons with less than perfect credit or with little or no money available for a down payment to purchase a home.
Q. When will I receive a deed to the property?
A. Title to the property remains with the lessor/seller until the lessee/buyer exercises the option to purchase.
Q. Disadvantages of lease option.
A. Because the lessee/buyer is not paying a traditional home finance company, he does not receive any of the tax deductions for the interest on the house payments. Also, because the lessee/buyer is paying the lessor/seller each month instead of a traditional home finance company, if the lessor/seller were to go bankrupt or lose the home in foreclosure, the lessee/buyer's entire investment might be lost.