Posted by Bill Gatten on May 14, 1999 at 15:22:56:
A Lay-Away plan.
Bill
what’s the diffrence?land contract-lease option - Posted by lamar
Posted by lamar on May 14, 1999 at 03:33:20:
What is a land contract?
Re: what’s the diffrence?land contract-lease option - Posted by Jim Kennedy
Posted by Jim Kennedy on May 14, 1999 at 17:48:54:
Lamar,
To expand on Bill Gatten?s answer, a land contract is an installment selling arrangement where the buyer gets to use/occupy the property but does not receive a deed until the terms of the contract are fulfilled. That is why Mr. Gatten very succinctly referred to it as a Lay-Away plan. Since the seller does not give the buyer a deed, legal title does not pass to the buyer; however, the buyer does have EQUITABLE title during the term of the contract.
A land contract is called by different names depending upon the area of the country you?re in, but basically the concept is the same. It can be called a land contract, installment contract, installment land contract, conditional sales contract or contract for deed. The laws governing land contracts (or whatever it is called in your area) vary from state to state.
A lease-option, on the other hand, is a lease under which the lessee (tenant/buyer) has the right, but not the obligation, to purchase the property. A lease-option can be a single document that spells out the terms of the lease as well as the terms of the option to purchase. Many knowledgeable real estate investors suggest using two separate documents ? 1. A lease document, and 2. An option or sales document ? so that if a default occurs the lessor (landlord/owner) can evict the lessee under the terms of the lease in hopes of avoiding the complications that might arise if the tenant claims an equitable title under the terms of the option. Once the search capability is restored, you can review some in-depth discussions about the pros and cons and varying opinions expressed in the archives.
This is probably more than you ever wanted to know, but I hope it helps anyway.
Best of Success!!
Jim Kennedy,
Houston, TX