Provision Setting Out a Purchase Option
What this document covers
This Provision Setting Out a Purchase Option is a legal document that grants a tenant the right to purchase the building they are renting after a specified period, typically at the end of the fifth lease year. This form is essential for tenants who may want to secure ownership of the property they occupy, providing a clear method to exercise that right at fair market value. Unlike standard lease agreements, this provision specifically outlines the purchase option in detail, protecting both tenant and landlord interests.
Key components of this form
- Purchase option clause stating the tenant's right to buy the property.
- Fair market value calculation based on comparable buildings.
- Alternative purchase price option: the lesser of fair market value or a specified dollar figure.
- Time frame for exercising the purchase option at the end of the fifth lease year.
Common use cases
This form is ideal for tenants who wish to have the flexibility to buy the property they are renting. It should be used when negotiating a lease agreement that includes an option for purchase, especially for businesses looking to establish a long-term presence or for individuals considering home ownership after renting.
Who this form is for
- Residential or commercial tenants seeking to purchase the leased property.
- Landlords willing to offer a purchase option to attract long-term tenants.
- Real estate professionals involved in lease negotiations.
- Investors interested in properties that may benefit from a lease-to-own arrangement.
Completing this form step by step
- Identify the parties involved in the lease agreement: landlord and tenant.
- Specify the property details, including the address and description.
- Indicate the timeframe for the purchase option, specifically the end of the fifth lease year.
- Determine the fair market value or insert a specific dollar figure as the purchase price.
- Ensure all parties sign and date the form to validate the agreement.
Does this form need to be notarized?
Notarization is not commonly needed for this form. However, certain documents or local rules may make it necessary. Our notarization service, powered by Notarize, allows you to finalize it securely online anytime, day or night.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Avoid these common issues
- Failing to clearly outline the purchase option timeframe.
- Neglecting to establish how the fair market value will be assessed.
- Not including both parties' signatures on the document.
- Using vague language that can lead to confusion about the terms of the purchase option.
Why use this form online
- Convenience: Download and complete the form from anywhere.
- Editability: Easily customize the form to your specific needs.
- Reliability: Ensure a legally sound document drafted by licensed attorneys.
Key takeaways
- Tenants can secure a purchase option after a specified lease term.
- Ensures a transparent process for purchasing at fair market value or a set price.
- Important for tenants seeking an avenue to property ownership.
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FAQ
The Basic Structure of a Lease Purchase In a lease purchase contract, the buyer and seller agree to a lease period followed by sale of the property when the lease ends. This type of agreement combines both a lease and a purchase with the tenant/purchaser securing the option to purchase the house.
Typically, when you're ready to make an offer, you'll meet with your real estate agent and complete the Offer to Purchase form together. You may also want to write your offer with the help of an attorney. Although you can prepare an offer yourself, it's not recommended.
The names and addresses of both the seller and buyer. The offered purchase price and address of the property. The settlement date when the buyer intends to pay and obtain the title. Details of how you wish to pay the deposit, whether it be cash or by transfer.
The identity of the buyer and seller. A description of the property being purchased. The purchase price. The terms as to how and when payment is to be made. The terms as to how, when, and where the goods will be delivered to the purchaser.
A lease-option-to-buy arrangement can be a solution for some potential homebuyers, but it's not right for everyone. If you're not certain that you're going to be able to purchase the rental home at the end of the lease period, you might be better served with a standard rental agreement.
Declare your offer. Express your interest in making an offer to the estate agent or seller, and don't be afraid to go below the asking price. Make a list. Do the paperwork. Sign and wait.
In the sales contract write down the amount of gift. If the property is worth $200,000.00 and you are selling the property for $150,000.00 the Gift of Equity is for $50,000.00. Include a clause stating: The purchase price is $200,000.00 and the seller will credit the buyer $50,000.00 as a Gift of Equity.
Expiration date of the offer. Purchase price. Initial deposit. Down payment amount. Financing terms. Required home inspection. Contingencies. Warranties.
Lease-option contracts give you the right to buy the home when the lease expires, while lease-purchase contracts require you to buy it. You pay rent throughout the lease, and in some cases, a percentage of the payment is applied to the purchase price.
