Lease Option Contingency Clause
A Lease Option Contingency Clause is a provision in a lease agreement that grants the tenant the right to purchase the leased property at a specified price within a predetermined timeframe. This clause is beneficial for tenants who may wish to buy the property they are renting but are not yet ready to make a purchase.
The Lease Option Contingency Clause typically outlines the following elements:
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Option Fee: The tenant often pays an upfront fee for the option to purchase the property, which may be credited toward the purchase price if the option is exercised.
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Purchase Price: The clause specifies the price at which the tenant can buy the property, which can be determined at the time of the lease signing or set based on a future appraisal.
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Timeframe: The agreement will define the period during which the tenant can exercise the option to purchase, providing a clear deadline for both parties.
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Conditions: The clause may also include specific conditions that must be met for the tenant to exercise the option, such as maintaining the property in good condition or making timely rent payments.
For example, if a tenant enters into a lease agreement that includes a Lease Option Contingency Clause, they might pay a $5,000 option fee for the right to buy the property for $300,000 within the next three years. If they decide to proceed with the purchase during that timeframe, the option fee may be applied to the purchase price, reducing their out-of-pocket costs when acquiring the home.
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