Lease Option Contract - Posted by P. G. Maroney

Posted by Ed Copp (OH) on May 17, 2000 at 10:02:47:

P.G,
I am not a lawyer, that said here is what I read: $2,500 downpayment and RENTAL of $750 per month. It looks to me like the $750 is rent not down payment…ED

Lease Option Contract - Posted by P. G. Maroney

Posted by P. G. Maroney on May 17, 2000 at 08:45:46:

Help! Could someone look over this part of my Lease Option Contract and answer a few questions for me?
[1] Does this mean the whole $750.00 rent goes toward my down payment? If this is true then my total down payment will be (2500.00 + 750 X 48 ) $38500.00
This house was appraised in 96 at $93000.00
[2] Can The Lessor refuse to sell, ie back out of the contract?

Copied with OC software so some of the words are misspelled but I think you can understand it.

STATE OF SOUTh CAROLINA
COUNTY OF LEXINGTON

LEASF WITH OPTION TO PURCHASE

This LEASE AGREENIENT made and entered this 2’.lth day ofluN. 1996, by and bets’een ******************. as
Trustee for the ************** Revocable Taist, of *** Emerald Isle, *******, hereinafter called .Lessor", and
**********************************, of 609 East Church Street, in Lees½ille, SC 29070, hereinafter called “LESSEES”

WITNESSETH;

In consideration ofthe covenants and agreements of the respective parties herein contained, the LESSOR and LESSEES,
for themselves, their heirs, distributees, executors, personal represetitatives, administrators, legal representatives, and permitted
assigns, do hereby a-4ee as follt}wq

I. PREMISES: LESSOR by these presents do hereby demise and lease unto the LESSEES for all lawful purposes all that
certain premises, together with the building and improvements therein, located at 325 RawIs Drive in the City ofLeesville,
Lexington County, South Carolina, more frilly described as follows:

To have and to hold such property unto the LESSEES, together with all rights and privileges thereunto belonging upon the
following terms and conditions.

  1. TERM: The term of this lease shall begin on September 1, 1996, and shall continue until August 31.2000, This lease maybe renewed for an additional term of One (1) Year upon agreement of the parties Thirty (30) Days prior to the expiration of the original lease term.

  2. OPTION TO PURCHASE: LESSOR hereby grant unto the LESSEES the option to purchase the leased premises and all
    improvernents thereon during the period September 1, 1996 through August 31,2000 (or August 31,2001 should the lease be extended) for the purchase price of Seventy-six Thousand and No/100 ($76,000.00) Dollars, with all payments under the lease credited toward the purchase price. If LESSEES desire to exercise this purchase option, they shall do so only by written notice delivered to the LESSOR during the period above stated and~thi option, if not exercised, shall expire on August 31, 2000 (or August 3 I, 2001 should the lease be extended).

LESSOR~ in consideration of the purchase price, shall, at the closing to be held in Lexington, South Carolina, convey said
property in fee simple, except those easemeilts and restrictions ofrecord, to the LESSEES. their heirs and assigns, by warranty
Deed, free ofany encumbrances which adversely afl’ect the marketable title. The costs of Deed preparation and Documentary Taxes
shall be paid by the LESSOR and all other closing costs shall be paid by the LESSEES. Lexington County Property Taxes and
water billings shall be pro-rated to the date ofclosing. If for anv reason the LESSORS are unable at closing to deliver title to the
property insurable by a reputable title company at normal rates without exception as to any matter adversely affecting
marketability, the LESSEES shall promptly notify the LESSOR ofthe objections and LESSOR may have a reasonable amount of
time extension within which to cure such defects, The purchase price of Seventy-six Thousand and NoIiOO ($76,000.00) Dollars
shall be secured by a Promissory Note and Mortgage to the LESSOR by the LESSEES for a period not to exceed Thirty (30) Years
at an interest rate of8.75% per anrium. The Mbitgage term shall be the initial term ofThirty (30) Years, less the number of

years which the property is leased. The monthly payment, inclusive of principal and interest, shall be $597.90, and in addition
LESSEES shall pay to tile LESSOR the sum of$l 52.00 per month for escrow for taxes arid insurance for a total monthly payment
of $750.00 . All payments hereunder shall be on or before the first day of each month …A late charge of$50.00 shall be imposed
upon any payment not received within Fifteen (15) Days ofthe due date.

  1. RENTAL: The LESSEES shall pay unto the LESSOR the sum ofTwo Thousand Five Hundred and no/i00
    ($2,500.00) Dollars as a down payment upon the execution of this Agreement, with rental payable in monthly installments of Seven
    Hundred Fifty and No/lOO ($750.00) Dollars each, payable on or before the first day ofeach month. For aiw payment riot received
    by the 15th day ofthe month, a Fifty ($50.00) Dollar late payment shall be imposed. Until flirtlier notification, LESSEES shall
    make all rental payments to Eva S. Sanders at 157 Emerald Isle, Chapin, South Carolina 29036.

  2. OTHER PAYMENTS: LESSEES shall pay all property taxes due to Lexington County, the City of Lees’ville,
    arid Lexington County School District Number Three (3) and any and all city, county or other ad valorem taxes on assessments
    levied upon the subject property of the LESSEES located on such preinises, and shall provide LESSOR proofofthe payrnent ofall
    such taxes, which payments shall be paid monthly with principal and interest by the LESSEES. LESSEES shall be additionally
    solely responsible for the payment of all utility charges of any kind, including but not limited to, gas, electric, water, sewer, and
    telephone. It shall be the sole responsibility of the LESSEES to provide insurance. coverage upon their personal property utilized
    during the course oftheir occupancy ofthe subject premises. LESSEES shall maintain and repair the premises as required to keep all
    improvements arid parking in a first-class tenable condition, and other charges or expenses which may arise or result from his
    occupancy ofthe rented premises.

  3. CONDITION OP PREMISES: LESSEES have inspected and accepts the leased premises in the same condition they
    are in at the time of the commencement ofthe term ofthis lease.

  4. REPAIR AND CARE OF BUILDING BY LESSEES: LESSEES shall, throughout the term of tl’is lease, at their own
    expenses, maintain in good order and repair the leased premises, including the building and other improvements located thereon.
    Such repairs by the LESSEES shall include as applicable, but are not limited to, repairs to electrical and plumbing systems and
    fixtures, air conditioning and heating systems and fixtures, and mowing ofgrass and care ofshmbs. LESSOR shall maintain pest
    control inspection and treatment ofpremises as required.

Re: Lease Option Contract - Posted by Laure

Posted by Laure on May 18, 2000 at 05:17:49:

I agree with Piper. Get an Attorney involved, right now ! There is too much money on the table here to leave it to chance.

Laure :slight_smile:

Re: Lease Option Contract - Posted by MDonovan

Posted by MDonovan on May 17, 2000 at 16:27:59:

Yes, all rent payments will reduce the purchase price. This is not a lease option. It would be deemed to be a land contract for many reasons. This is a good contract for you because it essential conveys equitable title from the beginning for a very small down payment. It gives you full ownership rights, not just leasehold/purchase rights. It also gives you tax benefits of ownership. The only thing you lack is the deed itself, but you could get that if you decide to sell.

  1. RENTAL: The LESSEES shall pay unto the LESSOR the sum ofTwo Thousand Five Hundred and no/i00
    ($2,500.00) Dollars as a down payment upon the execution of this Agreement,
    with rental payable in monthly installments of Seven
    Hundred Fifty and No/lOO ($750.00) Dollars each, payable on or before the first day ofeach month. For aiw payment riot received

This paragraph says that it is an installment sale, with a down payment. Also, the fact that you are paying all taxes and repairs helps to make it a land contract. And the fact that you are not paying any non-refundable option consideration is another argument in favor of a contract for deed.

The purchase price of Seventy-six Thousand and NoIiOO ($76,000.00) Dollars
shall be secured by a Promissory Note and Mortgage to the LESSOR by the LESSEES for a period not to exceed Thirty (30) Years
at an interest rate of8.75% per anrium. The Mbitgage term shall be the initial term ofThirty (30) Years, less the number of

This paragraph gives you full owner financing with no down payment. You could execute the option on day one and get the deed for nothing down.

I would sign it in a heartbeat. Check with an attorney to see if I’m right. Its worth the fee.

To others, please post if I am wrong here.

Re: Lease Option Contract - Posted by JPiper

Posted by JPiper on May 17, 2000 at 11:59:16:

Wow! In my opinion this is a good example of how not to sell with a lease/option!

The contract clearly states the following: ?LESSOR hereby grant unto the LESSEES the option to purchase the leased premises and all improvernents thereon during the period September 1, 1996 through August 31,2000 (or August 31,2001 should the lease be extended) for the purchase price of Seventy-six Thousand and No/100 ($76,000.00) Dollars, with all payments under the lease credited toward the purchase price.?

This sum is NOT applied to your ?down payment?, but rather to the purchase price.

However, there is further language concerning the loan of $76,000, interest rates, and so forth. This is one confusing contract. It?s possible that what was intended was to have the rent apply according to some type of amortization schedule. At best it appears to have contradictions, and probably is NOT stating what the seller intended. BUT, if I were you, I?d hustle down to my REAL ESTATE ATTORNEY and have him/her interpret this for you. Sounds to me like the above paragraph may give you quite a deal, or at least give you one heck of a bargaining chip. Have a attorney take a look at it. You may end up with a battle on your hands.

JPiper