Lease Options in Jackson Hole
By Ron Miller/ Responsible Broker for JHREC
A lease option is also referred to as an installment land contract. The lease option is an equity ownership position created by an agreement in which the buyer makes payments under an agreement of sale in installment payments until a closing happens. The transaction is also called a 'contract for deed' in that a seller holds title as security until the balance is paid at closing to the terms agreed upon. In many respects, the lease option is like a mortgage, in that the buyer takes possession of the property, and usually maintains it and pays lease payments taxes and insurance. The only difference is that title remains in the seller's name until the balance of the debt is paid.
If you sell the property by lease with option to purchase to a buyer, it is not recorded as a sale as it is only a contract to buy at a later date. The lease option should be properly drafted by an attorney and properly give the buyer the right to purchase the property during the lease term at a specified price and timeline. If the buyer defaults or elects not to buy the property the document should be drafted to treat the optionee as a tenant so you can easily evict him like any other tenant. In a properly drafted contract, the buyer has an equitable interest in the property during the lease option timeframe if all terms are met.
Lease options can be attractive to both buyers and sellers for many reasons. A buyer may be very qualified and need time to sell another property to close while leasing. He is usually willing to pay full price for a property to buy the time needed to close. In an appreciating marketplace like Jackson Hole, a lease option can be good for a buyer as well. A property may appreciate while the lease option is running creating more equity for the buyer.
If you are looking for further real estate glossary terms, feel free to visit our site page, that will help you understand terms you may not be familiar with.
