Contract

Lease Option Contract

Here is the lease option agreement, costing $750, that I used for my first house. It was drawn up by a good real estate attorney. Just hi-lite and copy the text into a word program. Then you can edit it before you print it.
Be sure to review this document carefully and understand what it says. Modify, add or delete when deemed necessary

RESIDENTIAL LEASE WITH OPTION TO PURCHASE AGREEMENT

This Lease with Option to Purchase Agreement is entered into as of the ____ day of ________________, 2____, by and between ___________________________ ("Landlord"), and _____________________________________ ("Tenant").

WHEREAS, Landlord owns the real property with the address of _____________________________________________________.

WHEREAS, Landlord is willing to lease the Property to Tenant and grant Tenant an option to purchase the Property on the terms and conditions set forth below; and

WHEREAS, Tenant desires to lease the Property from Landlord and obtain an option to purchase the Property from Landlord on the terms and conditions set forth below:

NOW, THEREFORE, the parties hereto agree as follows:

Premises. In consideration of the option payment described below and rental payments hereinafter specified and the performance by Tenant of each term, covenant, and condition of this Lease, Landlord hereby rents to Tenant and Tenant hereby rents from Landlord, for residential use only, the Property which is comprised of a single family residence containing approximately _________ square feet.

2. Rent. Tenant shall pay rent of $________ per month in lawful money of the United States. Rent shall be paid to Landlord at _________________________________________ or to such other person at an address designated in writing by Landlord. The rent shall commence on the ____________ ("Commencement Date") and shall continue from month to month thereafter throughout the term of this Lease. Rent shall be payable IN ADVANCE on or before the ______ day of each and every month (the "Due Date"). Any rent paid (postmarked) after ten (10) days after the Due Date shall include a ten percent (10%) late charge based on the amount of such payment. The parties agree that such a late charge represents a reasonable estimate of the actual costs and expenses that Landlord would incur because of Tenant's failure to timely pay all amounts required hereunder, the exact amount of which would be difficult or impractical to ascertain. In the event any rent check given to Landlord or the Collection Agent by Tenant is returned by the bank for insufficient funds, Tenant agrees to pay Landlord the sum of $25.00 plus the amount of any bank charge actually levied against Landlord or Collection Agent as a result of Tenant’s returned check and any returned checks of Landlord or Collection Agent. Also, in said event, Landlord may require, on thirty (30) days advance written notice to Tenant, that Tenant pay all future rent amounts with a money order or a cashier's check. Notwithstanding any of the foregoing, any failure on the part of Tenant to make any rent payment when the same is due and to cure such failure within the time and manner required hereunder shall constitute a default hereunder.

3. Term. The term of this Lease shall be for a period of ________ months commencing on the Commencement Date and ending ____________.

4. Security Deposit. No security deposit is required by Landlord so long as Tenant fully and faithfully performs each and every term, provision, covenant, and condition of this Lease. If Tenant defaults in respect to any of the terms and conditions of this Lease, as a condition of accepting a cure of any default, Landlord, at Landlord's sole discretion, may require a reasonable security deposit to protect it against the consequences of further defaults, and this lease shall be amended accordingly.

5. Rent Deposit. Landlord does not require a last month's rent deposit.

6. Contents of Premises. The Premises are rented to Tenant in an as is" and unfurnished condition. Tenant, after inspection, accepts the property in its present "as is" condition with all faults.

7. Occupancy. Only those persons named as tenant in this lease and members of their immediate family shall be permitted to occupy the Premises without the prior written consent of Landlord. Guests of Tenant shall be permitted to occupy the Premises without the prior written consent of Landlord. "Guest", for purposes of this Lease, means a person who occupies the Premises for no consideration for not more than a total of twenty (20) consecutive days or not more than a total of forty (40) days in any calendar year.

8. Utilities and Other Charges. Tenant is to pay all charges for gas, electricity, cable T.V., water, sewer, garbage removal, telephone services and all other utilities and shall be responsible for contracting directly with the supplier of these services.

8.1 Insurance: Tenant shall obtain and maintain insurance on the home with carriers and with coverage approved by Landlord. Such coverage shall include, at least, "all risk" at full replacement value, public liability, and coverage for Tenant's property. All premiums shall be paid to and through an impound account established by Collection Agent throughout the term of this lease. Landlord shall be named as a named insured on all such policies.

8.2 Property Taxes: Tenant shall __________ all property taxes due or to become due during the term of this Lease through an impound account established by Collection Agent.

8.3 Collection Agent Charges: Tenant shall pay all charges of Collection Agent to set up and maintain the collection/impound account.

8.4 Maintenance: Tenant is responsible for and shall pay all expenses for maintenance and repair of the Premises and all repairs caused by Tenant or Tenant's guests through negligence or misuse, throughout the term of this Lease.

9. Assignment and Subletting. Except as set forth below, no portion of the Premises may be sublet. The entire Premises may not be sublet and this Lease may not be assigned by Tenant without the prior written consent of Landlord, which consent may be withheld for any reason whatsoever.

10. Pets. Tenant may keep a reasonable number of household pets on the Property.

11. Compliance by Tenant. Tenant agrees to keep the Premises, including all appliances and fixtures, in a clean and sanitary condition at all times and to otherwise comply with any city or county ordinance, or state or federal law applicable to Tenant's occupancy of the Premises. Tenant shall not commit waste or nuisance on or around the Premises and shall not disturb, annoy, endanger, or interfere with neighbors. Tenant shall be responsible for any damage caused by Tenant's negligence or misuse of the Premises and the damage caused by the negligence or misuse by Tenant's guests. Any removal or disturbance of the landscaping and lawn around the Premises requires the Landlord's prior approval.

12. Alterations and Modifications. Tenant shall make no structural alterations or modifications to the Premises without the prior written consent of Landlord. All modifications, alterations and decorations to the Premises made by Tenant which are affixed to the Premises shall become the sole property of Landlord upon the conclusion of Lease term without any obligation by Landlord to compensate Tenant. Landlord shall have the right, in Landlord's sole discretion, to require Tenant to restore the Premises to their original condition, normal wear and tear excepted, upon the conclusion of the Lease term.

13. Locks and Keys. If Tenant changes any lock to the Premises or adds any new lock requiring a new key, Tenant shall promptly notify Landlord and shall furnish Landlord with a copy of each and all new keys.

14. Tenant's Personal Property. TENANT'S PERSONAL PROPERTY IS NOT INSURED BY LANDLORD. Tenant may, and is advised by Landlord to, purchase what is commonly known as "renter's insurance" to protect Tenant's personal property, as well as the insurance required for the Property in 8.1, above.

15. Possession. If Tenant abandons or vacates the Premises, Landlord may terminate this Lease and recover possession of the Premises as provided by law. If Tenant leaves behind personal property after vacating or abandoning the Premises, Tenant agrees that it abandons all claim to such personal property and Landlord may dispose of the personal property in any manner permitted by law.

16. Landlord's Right of Entry. With Tenant's permission, which shall not unreasonably be withheld, or upon twenty-four (24) hours' notice, Landlord or Landlord's agents shall be permitted to enter the Premises to inspect, to make repairs, and to show the Premises to prospective tenants and purchasers. Unless otherwise consented to by Tenant, all such entries shall be during normal business hours. In an emergency or when Tenant has abandoned or surrendered the Premises, Landlord or Landlord's agents may enter the Premises at any time without securing prior permission from Tenant.

17. Notice. All notices required under this Lease shall be in writing and delivered via certified mail with return receipt to Landlord and Tenant as follows:

If to Landlord: ___________________________

___________________________

If to Tenant: ___________________________

___________________________

18. Waiver. Acceptance of rent by Landlord or Collection Agent shall not constitute a waiver of any default, except as to the amount of rent accepted. Any waiver of a provision of this Agreement must be in writing signed by the party waiving strict performance of a provisions of this Agreement. The waiver by the Landlord of any breach by Tenant hereunder shall not be construed to be a continuing waiver or a waiver of any subsequent breach.

19. Attorney's Fees. If any legal action, proceeding or arbitration is brought by either party to enforce any of the provisions of this Agreement, the prevailing party shall recover, in addition to all other relief, reasonable attorney's fees and costs. Such attorney's fees and costs shall not be limited to any court fee schedule, but shall rather be awarded on the basis of all fees and costs reasonably incurred in good faith.

20. Estoppel Certificate. Within five (5) business days after a written request by Landlord, Tenant agrees to complete and execute a certificate or statement supplied by Landlord that this Lease is in full force and effect and has not been modified in any way, or that the Lease is in full force and effect subject to modifications which shall be described by Tenant in the statement or certificate. If Tenant fails to complete and execute the certificate or statement within the time provided for herein, a purchaser or lender shall be entitled to rely on the certificate or statement as submitted by Landlord.

21. Option to Purchase. On the terms set forth below, Landlord grants Tenant the option to purchase the Property at any time during the lease term for a price of $______________ ("Purchase Price"). Tenant shall receive a credit against the Purchase Price equal to the Option Fee paid by Tenant and _______% of rent and other payments, excepting late fees, timely made by Tenant to Landlord or Collection Agent during the term of the Lease.

a. Option Fee: Tenant shall pay Landlord for the Option the sum of $_________ on _____________, and if the Option is not exercised by ___________, Tenant shall pay Landlord the further sum of $__________ on _____________, which will extend the term of the Option for a second year and until ____________.

b.          Term: The term of this Option shall commence on the effective date of this Agreement and shall continue for a period of one year until ____________, and if the second $________ Option Fee is paid on ____________, the Option shall extend for a further period of one year until __________, at which time the Option shall expire unless it has been exercised or extended by mutual agreement on such terms as the parties may agree in writing at that time.

c.            Exercise: Tenant may only exercise this Option in the event that he is not then in default under any term or condition of this Agreement. Tenant's exercise of this Option must be evidenced by a written notice addressed to Landlord, sent by registered or certified mail to Landlord's address, or to any other place designated by Landlord by written notice to Tenant. If the option is exercised, Landlord and Tenant will, within thirty (30) days thereafter, execute and deliver a formal purchase agreement which shall provide that the sale shall be all cash at the close of escrow, which closing shall take place within thirty (30) days from the date of the execution and delivery of the purchase contract.

d.          Failure to Exercise Option: If the Tenant does not exercise the Option prior to the expiration of the Option, the consideration paid for the Option (i.e. the Option Fee, and all rent and other charges paid under the Lease) shall be retained by the Landlord, and neither party shall have any further rights or claims against each other concerning the Option. Tenant will promptly execute a quitclaim or other deed prepared by Landlord to confirm termination of the Option.

e.          Closing Date: The transaction forming the subject of this Agreement shall be closed by Landlord and Tenant within sixty (60) calendar days after the exercise of the Option ("Closing Date"). Tenant agrees to give Landlord fifteen (15) days prior written notice of the proposed Closing Date. Notice shall be deemed to be given upon receipt by Landlord of Tenant's notice.

f.            Purchase Agreement. If the parties fail to execute and deliver a Purchase Agreement as provided in (c), above, the sale shall proceed on the following terms:

(i) If Tenant exercises the Option, Landlord shall convey title to the Property to the Tenant or the Tenant's assignee by good and sufficient deed. Such deed shall be deposited into escrow with the Escrow Agent on or before the Closing Date. Prior to the deposit of the deed into escrow, a copy of the deed shall be submitted to Tenant's counsel for approval, which approval shall not be withheld unreasonably.

(ii) Landlord shall accompany the deed with a CLTA's owner's guarantee policy issued by a title company of Tenant's choosing (hereinafter called the Title Company) in its customary form, agreeing to guarantee the record title to the Property to be free of liens and encumbrances subject only to the exceptions to be contained in the deed and the title report. The Tenant shall pay the cost of the title insurance report.

(iii) A preliminary title report may be ordered by Tenant at any time during the term of this Lease so that Tenant may evaluate the condition of Landlord's title. After exercise of Tenant's Option a Preliminary Title report in the form of a commitment to issue the title policy requested by the Tenant shall be ordered from the Title Company by the Landlord immediately upon receipt of notice of the exercise of the Option, a copy of which title report shall be delivered to the Tenant. Within ten (10) days from the receipt of the title report by the Tenant, the Tenant shall notify the Landlord and the Title Company of any restrictions, reservations, limitations, easements, liens, and conditions of record, together collectively called "title defects" disclosed in such title report which are objectionable to the Tenant. Should the Tenant so notify the Landlord of any such title defects, Landlord shall have until the Closing Date to cure or remove them. Landlord agrees to cure or remove at Landlord's sole cost and expense any and all liens, encumbrances or other title defects, except as may have been caused by Tenant. Should the Tenant not notify the Landlord of any such title defects, such defects shall be deemed waived by the Tenant.

(iv) Landlord shall also deliver to Tenant the originals of all leases, tenant files and surveys and plans and specifications for the Property, if any, in Landlord's possession.

(v) Landlord and Tenant shall also deliver to the Escrow Agent a Purchase Agreement and Escrow Instructions consistent with the terms and conditions set forth herein.

h. Right of Entry. For and during the period of the Option, Tenant shall have the right, from time to time, at Tenant's sole cost, expense, risk, and hazard, and in all such manner as Tenant may reasonably determine, without material damage being imposed upon the Property, to perform such inspections as Tenant elects to perform to discover and evaluate the condition of the Property. Any damage to the property shall be repaired at Tenant's sole cost and expense.

1. Closing. If, on the Closing Date, the Escrow Agent notifies the parties that:

(i) The Title Company will issue a CLTA owner's title guaranty policy, this transaction shall be closed in accordance with the terms and provisions of this Agreement; or

(ii) The Title Company will not issue a CLTA owner's title guaranty policy, and if the Landlord does not forthwith cure the title defects or if the Tenant does not waive the same, this transaction shall be postponed for a reasonable period of time not to exceed thirty (30) days until the Landlord shall have removed such title defects. If the Landlord is unable or refuses to cure such title defects within the thirty day period, then this transaction may, at the sole option of Tenant, be canceled and all deposits by Tenant into escrow shall be promptly refunded to the Tenant, and the documents deposited into escrow shall be returned to the Landlord. In that event, the parties shall be released fully from any liability hereunder, except that the Landlord shall pay the cost of the escrow and the charges of the Title Company. In the alternative, Tenant may proceed with the closing of this transaction without the removal or curing of the title defects and shall waive any and all claims against Landlord of whatever kind and nature.

(iii) If the Tenant shall, at its sole and exclusive discretion, waive the title defects preventing such issuance by so notifying the Escrow Agent, or if the Landlord shall have cured the same within the time permitted above, the obligations of the parties hereunder shall not be affected by reason thereof, there shall be no abatement or reduction of the purchase price, and this transaction shall close in accordance with the terms and provisions of this Agreement, except that such title defects as are waived by the Tenant, if any, shall be set forth as exceptions in the deed and in the title guaranty policy or title insurance, as the case may be.

j. Closing Adjustments. Closing Adjustments shall include rent, utilities, expenses and real estate taxes and assessments, both general and special, which shall be prorated by the Escrow Agent as of the date the deed is filed for record, using for such purposes the rate and valuation shown on the last available tax assessment.

k. Escrow Agent. The Escrow Agent shall perform the following:

(i) On the Closing Date, the Escrow Agent shall file for record the deed and any other instruments required to be recorded, and shall thereupon deliver to each of the parties the funds and documents to which they shall be respectively entitled, together with its escrow statement.

(ii) The Escrow Agent shall charge the Landlord with:

(1) The cost of the transfer tax;

(2) The cost of paying off and satisfying any mortgage indebtedness on the Property for which the Landlord is liable, together with the cost of any deed of trust cancellation, recording fee, or other costs incident to the satisfaction of any such indebtedness;

(3) One-half of the escrow fee;

(4) All other charges properly borne by the Landlord consistent with the terms of this Agreement; and

(5) The cost of the described title insurance.

(iii) The Escrow Agent will credit against and reduce the Purchase Price by all consideration paid by Tenant for the Option, which is the Option Fee (to a maximum of $______), and _____% of rent and other charges timely paid to Landlord or the Collection Agent.

(iv) Immediately thereafter, the Escrow Agent shall deliver to the Landlord the balance of the funds in its hands due under the terms hereof, and documents due the Landlord.

(v) The Escrow Agent shall charge the Tenant with:

(1) Any cost of financing this transaction which may be arranged for by the Tenant:

(2) The cost of filing the deed for record;

(3) One-half of the escrow fee;

(4) All other charges properly borne by the Tenant consistent with the terms of this Agreement.

(vi) Immediately thereafter, the Escrow Agent shall deliver to the Tenant the title guaranty policy or title insurance, as the case may be, the recorded deed, and any other funds or documents due the Tenant.

I. Broker. Each party agrees to indemnify and hold the other party harmless from any and all costs, expenses, or damages resulting from any claims for brokerage fees or other similar forms of compensation made by any real estate broker or any other person or entity because of the actions of such party.

m. Assignment of Option. Tenant may not assign his rights under this Option separately from all of Tenant's other rights under this Agreement. No assignment may be made without Landlord's prior written consent.

22. Miscellaneous.

22.1 Time is the essence of each agreement herein.

22.2 Tenant shall comply with all laws and ordinances of __________ County and the State of __________ during the term of this Lease.

22.3 Either party may request and the other party shall cooperate to record a memorandum of the essential terms of this Lease Option Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ___ day of ___________.

Landlord: _________________ Tenant:_________________