Often overlooked in a lease-purchase or lease-option agreement are the details of the lease period. It's important for buyer and seller alike to recognize that prior to the end of the lease period, one party will be the tenant and the other the landlord. As such, the seller should provide a standard rental agreement detailing all of the rules and obligations that would be expected of a renter. Likewise, the buyer should carefully review the rules
Responsibilities
- During the lease period, the owner must obey all applicable landlord-tenant laws (lease provisions out of step with these laws are unenforceable, even if signed by the tenant).
- The buyer and seller must work out who will be responsible for expenses related to the home's upkeep, including repairs, taxes and insurance.
- In many cases (typically lease-purchase) the seller will require that the buyer approve a home inspection prior to the lease period. The buyer must sign off on the results of the inspection as a condition of the agreement. Once inspected, the condition of the home is accepted "as is". This is to prevent the occupant from causing damage during the lease period and requiring the owner to make repairs prior to purchase.
- In a lease-option, any money paid by the buyer towards the purchase of the home should be held by a third party and not disbursed until the purchase option is exercised and the deal closes.
- The buyer should always review the status of the property's title and insurance prior to signing the lease-to-own agreement.