A lease option also known as a Lease with the option to Purchase is a contract type used in buying and selling Real Estate.
First the Buyer and the Seller agrees to a purchase price and the period of the Lease.
The period of lease is typically 1-3 years.
The Buyer purchase the Option by paying a small percentage of Purchase price (Eg: 5%). This is used to settle the Purchase price at the end of lease period.
The Buyer pays a monthly lease and a premium amount to the seller. The premium amount is used later to settle the Purchase price.
At the end of lease period, the buyer has the option to purchase the property by settling the purchase price. This is calculate by subtracting the Option amount and total monthly premiums from the Original Purchase pric
The seller can't sell the property until the lease period ends. Seller can only sell the property if the buyer is not willing to buy the property at the end of lease period. The seller keeps the option amount and monthly premiums if the buyer doesn't buy the property.
The seller can take legal action to evict the buyer from the property in case of non-payment.
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