Posted by B.L.Renfrow on June 19, 1999 at 20:04:38:
First, you should take the time to read the articles on this site under How to Articles, Money Ideas and Legal Corner on lease options. There’s a ton of useful and practical advice there…and it’s free!
As for your specific questions:
Benefits of L/O to seller: payments are guaranteed (by you); better quality of tenants; you’ll be responsible for the maintenance; no management problems; seller remains on the deed and gets the tax benefits; no Realtor commissions; non-refundable option consideration (if you choose to offer it; I don’t); above-market rent; positive cash flow.
No such thing as “standard” forms, but my understanding is that the courses from Legrand and Bronchick contain various examples. (I don’t have either course, so I can’t comment directly on that). I’ve made my own, which were reviewed by my attorney, but I’m constantly refining them. No two deals have used exactly the same forms.
If there’s an underlying mortgage on the property, either arrange for the portion of your payment covering the mortgage payment to go directly to the mortgage holder, or run it through an escrow agent (attorney, bank or whatever) and they will pay the mortgage holder and send the balance to the seller. You should avoid paying the seller directly if there is a mortgage, lest he pocket the money and fail to pay on the underlying loan.
Hope this answers some of your questions.