Lease Options


Looking to buy or sell in Marin?  You might want to consider the Lease Option route. 


The term you hear most often is the simple "lease option" actually short for a "Lease with the Option to Purchase".  It's the type of lease agreement made by a home owner and renter that includes an increasingly popular provision: at the end of the rental period, the tenant is given the right to choose to purchase the property for pre-determined price.  It's the tenant's option.


In today's real estate market with its tight lending and volatile prices, the provisions of a lease option agreement have proved increasingly attractive to potential area buyers who might otherwise have remained on the fence. It's why it makes good sense for Marin County property owners to take a closer look at the advantages and disadvantages of using a lease-option to appeal to potential buyers.


One advantage for both the seller and buyer in a lease option transaction can be found in the terms.  Among the differing factors that can be negotiated when drafting a lease option contract are the price of the monthly lease, purchase price, and the term of the lease. Since the possibility of home ownership is part of the agreement, these terms can frequently be agreed upon more favorably for the seller than would be the case in a simple lease or rental negotiation - especially since the seller can choose to offer flexibility in the lease term, option term, rental credit towards purchase, refundable or non-refundable option money down, repair and tax responsibility, etc.  The buyer also can come out ahead: he or she buys time and gains immediate control of a home and title without having to come 20% out of pocket.


Another key advantage of the lease option for landlords is the quality of tenant Marin lease option sellers are likely to attract. Tenants who are living in a home with an eye towards owning it are incented to take better care of a property which may become theirs. It's common for them to pay rent in a timelier manner, and even to pay for minor improvements themselves.


Sellers and buyers considering the lease option route do have to consider the disadvantages as well.  Owners often will still bear the responsibility of managing the property and paying the mortgage, property taxes and maintenance during the lease portion of the contract. A tenant-buyer also has a certain amount a power over the title of the property since once a lease option agreement is reached, the home cannot be sold to anyone else during the term. And of course should the lease option tenant-buyer decide at the end not to buy the home, the seller is back to Square One.  The tenant side is not without risk; a landlord could fall behind on mortgage payments and jeopardize the entire transaction and any sweat equity the tenant may have already put into the property.


A lease option can benefit both the landlord-seller and the tenant-buyer provided that there is clear communication and a professionally written agreement between the two.  It's important to remember that a lease option agreement is a binding contract and should be drafted with the help of an experienced real estate agent or attorney.


Contact our lease option department anytime if you would like to further discuss using a lease option to buy or market your Marin home: 

(415) 507-9600

Lease Option Marin