Is a Lease Purchase Option Worth the Expense and Risk?

Posted by Mike In Breach of Contract, Real Estate 0 comment

Lease option agreements are one way to circumvent a financing problem when the buyer has poor credit. A lease option is a lease between a landlord (seller) and a tenant (buyer) but with the option to buy. The tenant has the benefit of consumer protection laws and the right to walk away from the lease without purchasing. The option usually locks in the price for the tenant should they decide to buy. The option gives security to the tenant knowing they can “try before buying” and a guaranteed purchase price regardless of any increase in fair market value.

Lease options are similar to installment land contracts but have very different implications. (Learn more about installment contracts here).

 

 

Lease options also have risks and drawbacks. The tenant will have to pay something to the landlord in exchange for the right to buy (the option). This compensation is usually in the form of increased rent during the term or a lump sum payment at the start of the lease. If the tenant decides not to exercise the option, the payment is forfeited. 

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How to Recover Earnest Money Deposit After a Purchase Falls Through

Posted by Mike In Breach of Contract, Real Estate 0 comment

It happens countless times. A prospective buyer tenders a $10,000 deposit to a seller for a residential property. But prior to closing, a financing problem prevents the buyer from completing the sale. Most residential agreements of sale contain a mortgage contingency where the buyer may back out if financing is denied. The buyer is usually entitled to full return of the earnest money if denied financing.

 

 

Aggravated sellers often look for reasons to keep the deposit when the buyer’s financing is denied. One common dispute is over whether the buyer misled the seller as to creditworthiness. The seller’s argument is usually that no offer would have been made to the buyer if the seller had known of the credit issue.

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Four Things Families of Elderly Property Owners Must Hear

Posted by Mike In Breach of Contract, Guardianships, Real Estate, Specific Performance 0 comment

I recently represented an elderly property owner who was sued for allegedly backing out of a real estate sale. My client resided in her home situated on a beautiful 40+ acre property her entire life. It is peaceful suburban farmland populated by many animals and containing a huge barn. The property was also a family home for more than 100 years. 

 

My client was approached by a developer who wanted to acquire the property for development. One of the family members who sought to benefit from a sale engaged a realtor when the offered price was discovered. But my client could not sell – she was previously diagnosed with advanced dementia and memory loss. Despite the diagnosis, some of the family members misled my client and pressured her into signing an agreement of sale. Fortunately, other family members came to her aid and halted the sale. The developer filed a lawsuit to enforce the sale called a “specific performance” action. 

 

 

A property owner who lacks mental capacity cannot sell a property no matter how urgent it may be to sell the property. I have represented very well intentioned families who want to save an elderly person’s property from various real estate problems. But if the property owner did not sign a power of attorney prior to becoming incapacitated, a guardianship must first be created.

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