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Lease option verse land contract?
I am about to enter into a Lease option on a specific home and was wondering what is the difference between a lease option and a land contract and what should I as the buyer (renter) make sure Is in the contract so to cover my legal obligations. Also should we make sure the "Lease Option is recorded with the state (Ohio)
Public Comments
- With a lease option, you are paying for rent and buying an option contract to purchase the property at some future date. If you miss a monthly payment, I would assume that you lose your option contract, and the money you paid for it. No legal action is normally necessary on the part of the lessor, except he may give you a notice to move because you broke the rental contract. If the lease and option is fulfilled by you, your option payments would usually apply to a small down paymwnt on the purchase of the building. If you change your mind about buying the property, you should have the right to continuing the lease payments minus the payments on the option contract. You can decide not to exercise your option to buy at any time. Of course, you lose the money you paid for the option contact. A land contract is an agreement for the buyer to buy, and the seller to sell real estate at some future date. The most common downpayment is 10%. The buyer takes possession of the property. It is his or her obligation to pay the taxes, insurance, make repairs, and make payments to the seller., including interest on the balance due on the contract. If he or she fails to make payments the seller starts a legal action to forclose. At the end of 5 to 7 years the buyer should have paid enough on the principal to obtain mortgage financing on the balance due. If he doesn't refinance it by that time as stated in the contract, he will lose the property. The buyer of the land contract does not own the property until title passes when the mortgage is obtained. It is imperative that the lease to buy or a land contract be reviewed by your attorney before you sign anything. There are some bad deals out there. Good luck.
