How separate are Lease & Option in an L/O? - Posted by Kristine-CA

Posted by randyOH on August 26, 2003 at 20:52:12:

Kristine,
I think most options in L/O deals (including mine)contain a clause stating that the option agreement is void if the t/b violates any provision of the lease.

But I think you have touched on sensitive issue. Having such a clause in the option agreement probably makes the arrangement vulnerable to a recharacterization as a land contract.

My lawyer tells me that our local court automatically recharacterizes any lease/option as a land contract.

HTH,
Randy

How separate are Lease & Option in an L/O? - Posted by Kristine-CA

Posted by Kristine-CA on August 26, 2003 at 19:41:45:

Greetings all. If you had the opportunity to option something you were renting, is there any advantage to a straight option over a lease/option? The reason I ask is that it seems to me that a rental/lease could convolute an otherwise good deal for an option-to-buy.

For example: If one broke the terms of the lease or was having a disagreement with the landlord (I mean seller), if the option were separate, one could still exercise their option. Or sell their option. This is, of course, assuming the the option-to-buy price was a good deal. Which I understand is often not the case for tenant buyers with poor credit. However, in appreciating markets, an option-to-buy that could be assigned would be a commodity.

Any thoughts? What am I missing? Sincerely, Kristine

Re: How separate are Lease & Option in an L/O? - Posted by Barry (FL)

Posted by Barry (FL) on August 27, 2003 at 24:02:10:

I you you are buying on L/O you want both the L with O in the same document. This will give you more leverage to say that it was a sale if things go bad.
If you are selling on L/O you want 2 seperate docs 1 lease with a seperate option.