"Lease Option Agreement Template"

What Is a Lease Option Agreement?

A Lease Option Agreement is a legal contract prepared by the owner of real estate and the tenant that gives the latter party an opportunity to buy the property after the term of the lease is over. You can download a printable Lease Option Agreement template through the link below.

Alternate Name:

  • Lease Agreement with the Option to Purchase Real Estate.

This document is for you if you cannot pay the whole price of the house or office space at once or you prefer to live or work there for some time before making a significant purchase. Moreover, the person or company may have credit problems which means they cannot qualify for a traditional mortgage or loan at the moment. A contract of this kind is also beneficial to the landlord - they can receive regular rent without losing income and then sell the place to their tenant interested in long-term occupancy.

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How to Write Up a Lease Option Agreement?

Follow these steps to compose an Option to Lease Agreement:

  1. Properly title the document - it is recommended to name it "Lease Agreement with Option to Purchase Real Estate" to indicate the purpose of the contract. The tenant is not obliged to buy the property once the lease is up but they may exercise this right.
  2. Identify the parties to the contract - the landlord and the tenant. Since this document involves an option to buy, you may add right away that you will refer to the parties as landlord/seller and tenant/purchaser.
  3. Write down the legal address of the real estate in question. List the furniture and appliances that come with the property - the tenant must check them to confirm their condition before signing the papers.
  4. Indicate the lease terms. The tenant may use the estate for residential or commercial purposes while making regular payments to the landlord. Usually, the payments are due on the first day of each month. The term of the lease is up to the parties, but it typically does not exceed two or three years. Determine the rules for both parties - the tenant must take care of the estate and handle maintenance and routine repairs while the landlord deals with major repairs and does not interfere with the tenant's quiet enjoyment.
  5. Discuss and put in writing the option to buy the property. For instance, the tenant may purchase the apartment in three years after signing the document if they keep making lease payments and also pay a set price of the estate. You may add the price during the initial negotiations or agree that the price will be determined later in accordance with the future state of the housing market. Basically, the tenant has the right of first refusal - they do not have to buy the estate when the lease is over, but if they choose to do it, the landlord must agree.
  6. Confirm you understand all the provisions of the agreement, sign and date the document.

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Lease Option Agreement
This Lease Option Agreement (hereinafter referred to as the “Lease”) is entered into as
of __________________, by and between ________________________, with a mailing
address of _______________________________________________________________
____ (hereinafter referred to as the “Seller/Landlord”) and ________________________,
with a mailing address of ___________________________________________________
_______________________ (hereinafter referred to as the “Buyer/Tenant”), collectively
referred to as the “Parties,” both of whom agree to be bound by this Lease.
WHEREAS, the Seller/Landlord is the fee owner of certain real property being,
lying and situated in _________________________, such real property having a
street address of ____________________________________________________
(hereinafter referred to as the “Property”).
WHEREAS, the Seller/Landlord and the Buyer/Tenant have together executed a
prior lease agreement, the subject of which is the aforementioned Property
(hereinafter referred to as the “Lease Agreement”).
NOW, THEREFORE, for and in consideration of the covenants and obligations
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller/Landlord hereby grants to
the Buyer/Tenant an exclusive Option to Purchase the aforementioned “Property.”
1. Rent. The Buyer/Tenant shall pay the Seller/Landlord a rent of $__________________
in monthly payments, each payable on the _______ day of each month in advance at such
place as we may from time to time specify by written notice to you. The Buyer/Tenant
shall pay a security deposit of $__________________ to be returned upon termination of
this Lease and the payment of all rents due and performance of all other obligations.
2. Utilities and Services. The Buyer/Tenant shall at its own expense provide the
following utilities or services to the premises during the lease term:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
E.g., Water, Electricity, Garbage Service, etc.
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Lease Option Agreement
This Lease Option Agreement (hereinafter referred to as the “Lease”) is entered into as
of __________________, by and between ________________________, with a mailing
address of _______________________________________________________________
____ (hereinafter referred to as the “Seller/Landlord”) and ________________________,
with a mailing address of ___________________________________________________
_______________________ (hereinafter referred to as the “Buyer/Tenant”), collectively
referred to as the “Parties,” both of whom agree to be bound by this Lease.
WHEREAS, the Seller/Landlord is the fee owner of certain real property being,
lying and situated in _________________________, such real property having a
street address of ____________________________________________________
(hereinafter referred to as the “Property”).
WHEREAS, the Seller/Landlord and the Buyer/Tenant have together executed a
prior lease agreement, the subject of which is the aforementioned Property
(hereinafter referred to as the “Lease Agreement”).
NOW, THEREFORE, for and in consideration of the covenants and obligations
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller/Landlord hereby grants to
the Buyer/Tenant an exclusive Option to Purchase the aforementioned “Property.”
1. Rent. The Buyer/Tenant shall pay the Seller/Landlord a rent of $__________________
in monthly payments, each payable on the _______ day of each month in advance at such
place as we may from time to time specify by written notice to you. The Buyer/Tenant
shall pay a security deposit of $__________________ to be returned upon termination of
this Lease and the payment of all rents due and performance of all other obligations.
2. Utilities and Services. The Buyer/Tenant shall at its own expense provide the
following utilities or services to the premises during the lease term:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
E.g., Water, Electricity, Garbage Service, etc.
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The Seller/Landlord shall at its expense provide the following utilities or services to the
premises during the lease term:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
E.g., Water, Electricity, Garbage Service, etc.
The Seller/Landlord does not warrant the quality or adequacy of the utilities or services
specified above, nor does the Seller/Landlord warrant that any of the utilities or services
specified above will be free from interruption caused by repairs, improvements, or
alterations of the building or the premises or any of the equipment and facilities of the
building, any labor controversy, or any other causes of any kind beyond the
Seller/Landlord’s reasonable control. Any such interruption and any other inability on the
Seller/Landlord part to fulfill their lease obligations resulting from any such cause--will
not be considered an eviction or disturbance of the Buyer/Tenant’s use and possession of
the premises, or render the Seller/Landlord liable to the Buyer/Tenant for damages, or
relieve the Buyer/Tenant from performing their lease obligations.
3. Obligations of Buyer/Tenant. The Buyer/Tenant further agrees that:
● Condition of Premises. Upon the expiration of the Lease it shall return possession
of the leased premises in its present condition, reasonable wear and tear, fire
casualty excepted. The Buyer/Tenant shall commit no waste to the leased
premises;
● Assignment or Subletting. The Buyer/Tenant shall not assign or sublet said
premises or allow any other person to occupy the leased premises without the
Seller/Landlord prior written consent;
● Alterations. The Buyer/Tenant shall not make any material or structural alterations
to the leased premises without the Seller/Landlord prior written consent;
● Compliance with Law. The Buyer/Tenant shall comply with all building, zoning
and health codes and other applicable laws for the use of said premises;
● Tenant’s Conduct. The Buyer/Tenant shall not conduct on premises any activity
deemed extra hazardous, or a nuisance, or requiring an increase in fire insurance
premiums;
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● Pets. The Buyer/Tenant shall not allow pets on the premises;
● Right of Termination and Re-Entry. In the event of any breach of the payment of
rent or any other allowed charge, or other breach of this Lease, the Seller/Landlord
shall have full rights to terminate this Lease in accordance with state law and
re-enter and re-claim possession of the leased premises, in addition to such other
remedies available to the Seller/Landlord arising from said breach.
4. Option Term. The Option to Purchase period commences on __________________
and expires at __________________ on ____________________.
5. Notice Required to Exercise Option. To exercise the Option to Purchase, the Buyer/
Tenant must deliver to the Seller/Landlord written notice of the Buyer/Tenant’s intent to
purchase. In addition, the written notice must specify a valid closing date. The closing
date must occur before the original expiration date of the Lease Agreement, or the date of
the expiration of the Lease designated above, whichever occurs later.
6. Option Consideration. As consideration for this Lease, the Buyer/Tenant shall pay the
Seller/Landlord a non-refundable fee of $__________________, receipt of which is
hereby acknowledged by the Seller/Landlord . This amount shall be credited to the
purchase price at closing if the Buyer/Tenant timely exercises the Option to Purchase,
provided that the Buyer/Tenant: (a) is not in default of the Lease Agreement, and (b)
closes the conveyance of the Property. the Seller/Landlord shall not refund the fee if the
Buyer/Tenant defaults in the Lease Agreement, fails to close the conveyance, or
otherwise does not exercise the Option to Purchase.
7. Purchase Price. The total purchase price for the Property is $__________________.
Provided that the Buyer/Tenant timely executes the Option to Purchase, is not in default
of the Lease Agreement, and closes the conveyance of the Property, the Seller/Landlord
shall credit towards the purchase price at closing the sum of $__________________,
from each monthly lease payment that the Buyer/Tenant timely made. However, the
Buyer/Tenant shall receive no credit at closing for any monthly lease payment that the
Seller/Landlord received after the due date specified in the Lease Agreement.
8. Exclusivity of Option. This Lease is exclusive and non-assignable and exists solely
for the benefit of the named Parties above. Should the Buyer/Tenant attempt to assign,
convey, delegate, or transfer this Option to Purchase without the Seller/Landlord’s
express written permission, any such attempt shall be deemed null and void.
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9. Closing and Settlement. the Seller/Landlord shall determine the title company at
which settlement shall occur and shall inform the Buyer/Tenant of this location in
writing. The Buyer/Tenant agrees that closing costs in their entirety, including any points,
fees, and other charges required by the third-party lender, shall be the sole responsibility
of the Buyer/Tenant. The only expense related to closing costs apportioned to the
Seller/Landlord shall be the pro-rated share of the ad valorem taxes due at the time of
closing, for which the Seller/Landlord is solely responsible.
10. Financing Availability. The Seller/Landlord makes no representations or warranties
as to the availability of financing regarding this Option to Purchase. The Buyer/Tenant is
solely responsible for obtaining financing in order to exercise this option.
11. Financing Disclaimer. The Parties acknowledge that it is impossible to predict the
availability of obtaining financing towards the purchase of this Property. Obtaining
financing shall not be held as a condition of performance of this Lease. The Parties
further agree that this Lease is not entered into in reliance upon any representation or
warranty made by either Party.
12. Remedies Upon Default. If the Buyer/Tenant defaults under this Lease or the Lease
Agreement, then in addition to any other remedies available to the Seller/Landlord at law
or in equity, the Seller/Landlord may terminate this Option to Purchase by giving written
notice of the termination. If terminated, the Buyer/Tenant shall lose entitlement to any
refund of rent or option consideration. For this Lease to be enforceable and effective, the
Buyer/Tenant must comply with all terms and conditions of the Lease Agreement.
13. Commission. No real estate commissions or any other commissions shall be paid in
connection with this transaction.
14. Recording of Agreement. The Buyer/Tenant shall not record this Lease on the Public
Records of any public office without the express and written consent of the
Seller/Landlord .
15. Acknowledgments. The Parties are executing this Lease voluntarily and without any
duress or undue influence. The Parties have carefully read this Lease and have asked any
questions needed to understand its terms, consequences, and binding effect and fully
understand them and have been given an executed copy. The Parties have sought the
advice of an attorney of their respective choice if so desired prior to signing this Lease.
16. Timing. Time is of the essence in this Lease.
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17. Governing Law. The Parties agree that this Lease shall be governed by the laws of
_____________________.
State
The Parties agree to the terms and conditions set forth above as demonstrated by their
signatures as follows:
_________________________________
_________________________________
Seller/Landlord’s Name
Buyer/Tenant’s Name
_________________________________
_________________________________
Seller/Landlord’s Signature
Buyer/Tenant’s Signature
_________________________________
_________________________________
Date
Date
_________________________________
_________________________________
Witness’s Name
Witness’s Name
_________________________________
_________________________________
Witness’s Signature
Witness’s Signature
_________________________________
_________________________________
Date
Date
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