Questions and Professional Answers

• Contract vs Lease option

  I have a real estate transaction in progres, there is a question wether it is actually an option or a contract. Part of the property was purchased on contract and part of it had an option. The problem is that they had a double default clause in it that stated if the lease option wasn`t exercised that the land purchased under contract would also have to be forfeited. What would distinguish definetivley between a contract and an option. How could it be considered an option where as if I don`t excercise the option, I have to give up the land purchased under contract of which todate I have 700,000 invested into. I was supposed to receive a payment from the gov. on a parcel of land they were purchasing from me but the payment was not paid in time to meet the option part of the agreement. Now the seller is attempting to also foreclose on the property purchased under contract. What is the difference between an option and a contract and can they legally fore close on the land purchased under contract???

  • Re: Contract vs Lease option

    Your question raises a large number of issues. It is clear that given the investment you need to consult with legal counsel about the specifics of your situation, an in particular review the documents that form the transaction. However, generally, an option is distinguished from a purchase contract by the right to have immediate possession. Under an option, the person holding the option has no immediate right to possession of the real property. In a land sale contract, the purchaser normally has beneficial possession and the legal right to possesion. In your situation, it appears that you have a lease (and with it the right to possession) with an option to purchase. But it also appears that the "double forfeiture" as you describe it may give the vendor (sellor/lessor) the right to take back the portion of the property purchased on contract. Generally, the law disfavors forfeitures. If there is any way a court could construe the contract here so that it could avoid forfeiting that portion of the property, then courts will usually attempt to do so. Also, you may have an equitable right to recover from the seller the value of the improvements to the property. Again, given the amount in dispute, you need to consult with legal counsel who can review the documents and transaction to give you complete advise. Please contact me if you would like to set up an appointment.

    Jeffrey W. Jones
    Jeffrey W. Jones, P.A.
    3 Franklin Street - P.O. Box 622
    Ellsworth, ME 04605-0622

• Lease Option Agreement

  If there is a legal lease option contract with a start and stop date clearly denoted in the lease option and the end date is a Saturday should the option to exercise the terms of the contract be completed on Friday or Saturday? As the last day is the end of the 3 year contract.

  • Re: Lease Option Agreement

    NOTE: This communication is not intended as and should not be interpreted as legal advice. Rather, it is intended solely as a general discussion of legal principles. You should not rely on or take action based on this communication without first presenting ALL relevant details to a competent attorney in your jurisdiction and then receiving the attorney's individualized advice for you. By reading the "Response" to your question or comment, you agree that the opinion expressed is not intended to, nor does it, create any attorney-client relationship, nor does it constitute legal advice to any person reviewing such information, nor will it be considered an attorney-client privileged communication. If you do not agree, then stop right here, and do not read any further.This would be governed by the terms of the agreement. Without reviewing the instrument, it is impossible to respond. I would suggest you have a local attorney review the lease and option contract to determine your legal rights and responsibilities.Scott R. Jay, Esq.

    Scott R. Jay
    Law Offices of Scott R. Jay
    1575 Northeast 205th Street
    Miami, FL 33179-2133

• lease option to buy/ forfiting the contract

  I have a signed and notorized lease option to buy and I'm using my option to buy and trying to buy the house and we are in escrow right now and the owner says that he doesn't want to sale the house and says that he wants to just lease it . Can he just void the lease option to buy even when I'm buying the house like I said I would in the lease option to buy.

  • Re: lease option to buy/ forfiting the contract

    You might want to consult with an attorney. It sounds like the "seller" might be forced to sell despite his reluctance to do so since you had a contract and presumably met all of the terms contained in the option.

    Robert F. Cohen
    Law Office of Robert F. Cohen
    P.O. Box 15896
    San Francisco, CA 94115-0896

  • Re: lease option to buy/ forfiting the contract

    Mr. Cohen is correct. Sometimes the contracts provide for the losing side having to pay the winning side's attorney fees and other costs. Go through the contract word by word, listing what is good for you, good for them, unclear, needs explaining, etc. A lease option in which the person is not allowed to buy the property is not a lease option, but merely a lease. Point out to him that with the market going down he may not be able for several years to get a much as you are paying and since part of the rent was designated as being credit against the eventual sales price, the owner must pay you that sum back immediately if he takes the position there is no enforceable lease.

    George Shers
    Law Offices of Georges H. Shers
    4170 Glenwood Terrace, Suite #1
    Union City, CA 94587

  • Re: lease option to buy/ forfiting the contract

    While I agree with the previous answers, I think someone should point out that an option to buy real estate is not necessarily a privilege to tie it up while you search for financing. Depending upon the language of the option portion of your lease-option contract, you may have been required to be "ready, willing and able" to complete the transaction on or before the option exercise date or the option expiration date. It could be that merely saying, "Yeah, I wanna buy" on the last day is insufficient to bind the owner to sell to you. A serious doubt about your ability to fund the purchase could very well be enough to release the grantor of the option from his duty to sell.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

• Lease option to buy contract

  I have a lease option to buy contract and I have entered into buying the house but know the date on the contract has exspired with the right to exstend if I don't buy, but the owner says that he doesn't have to sign another contract to extend another year, what should I do I need the date changed so we can buy the house and that's what we signed a lease option to buy?

  • Re: Lease option to buy contract

    Mt. Whipple has given you a thoroughly comprehensive answer. Follow his advice!

    Robert L. Bennett
    Law offices of Robert L. Bennett
    2117 N. Baker St.
    Bakersfield, CA 93305

  • Re: Lease option to buy contract

    Options are for a specific period of time; if the option period has expired, then you have NO option and the owner does not have to enter into a new contract.

    Judith Deming
    Deming & Associates
    5334 E. Chapman Avenue, Suite 100
    Orange, CA 932869

  • Re: Lease option to buy contract

    Just to make sure I understand the facts, here's what I think you are saying: You are a tenant under a lease with an option to purchase the property you're leasing. The option has expired. You've asked the owner (lessor) to extend the option in writing, but he has declined to do so on the ground that it's not necessary. Perhaps he is trying to convince you that an oral agreement to extend or renew the option is sufficient.If my understanding is correct, or at least close, the answer is that you are in dangerous territory. Generally speaking, options to purchase real estate must be in writing to be enforceable. Now, I haven't read your lease-option agreement, and it is POSSIBLE that it is self-extending by its own terms beyond an original expiration date. For example, it might read "Tenant shall have the option to buy during the term of this lease, or any extension thereof, at $X." Then, if the owner continued to accept rent, that would extend the lease on a month to month basis and also, at least arguably, the option.With real estate values falling recently, options are often less valuable that they otherwise would be, and this may make owners more willing to extend expiration dates. In some cases, an option holder might be better off to ignore the option and simply make an offer at current market value, or a bit lower.Nevertheless, especially if some of the rent paid is applicable to the option price, the option may be worth keeping alive, and if the owner is willing to extend an expired option, I'd push for him to put in writing. Again, an oral option agreement isn't worth the paper it's written on.

    Bryan Whipple
    Bryan R. R. Whipple, Attorney at Law
    P O Box 318
    Tomales, CA 94971-0318

• optioning to exercise option on lease option; lessor reneging on contract

  Do I need a special form or letter to exercise my option to buy my home at the end of my lease option contract? Also, the lessor is attempting to renege on the contract based on petty argument; do you have california case law sources that i can research?Thank you in advance,

  • Re: optioning to exercise option on lease option; lessor reneging on contract

    The lease option agreement should include how and when you can exercise your option. If you do not follow the contract exactly you may lose your option rights. You can also lose your rights if you breach the lease in any way. Late payment of rent or any required reimbursment or payment of utilities. You may be facing an eviction at the end of the lease which will move very rapidly. Specific performance of options can not be litigated in the unlawful detainer court and must be brought as a seperate action in the superior court where you can ask for a stay on the eviction.

    Deborah Barron
    Law Offices of Deborah Barron
    1900 Point West Way, Suite 202
    Sacramento, CA 95815

• Question about getting out ff a contract

  I recently signed a contract with a ''Private Investor'' for a lease/option on my home. I own the home and was looking for a way out, the contract states that he will basically become my tenant and lease the home from me for a period of 36 months then buy it at the end of that 36 months. It states that he has the option to sublease to tenants. This contract in contingent upon him finding tenants to move in by Oct 2002. I gave him no money and he gave me no money for signing this contract. After being a little sceptical of him and his business, I changed my mind and I do not want to follow through with this lease option deal. Can I get out of this contract with no penalties, because I decided I don't want to lease my house to him?

  • Re: Question about getting out ff a contract

    The answer to your question is maybe. It depends in part on what "business practices" have made you change your mind. Have you determined that the lessee is financially unable to go through with the contract? Has he breached the contract in some fashion? Has he proposed tenants whom you find unacceptable? (Is there a provision limiting subleasing to tenants whom you approve?)

    There are also questions that one might ask about the validity of the contract in the first place. What was the consideration given to you for entering into the option agreement? You said no money changed hands, what did you get out of the deal? (There should be mutual consideration for a valid, binding contract.)

    Just deciding that you don't like your tenant may not be enough to allow you to invalidate the deal, depending on the language of your lease agreement.

    However, there may be other alternatives. If you would like to call or e-mail more specifics, you are welcome to do so. Also, any lawyer would really need to review a copy of the contract to give you accurate and meaningful answers on this question.

    L. Eric Lundgren
    Lundgren Law Offices, P.C.
    519 East 18th Street., P.O. Box 746
    Cheyenne, WY 82003-0746

  • Re: Question about getting out ff a contract

    I agree with Mr. Lundgren. If you want an attorney in Colorado, let me know.

    Jason Savela
    The Savela Law Firm, PC
    250 Arapahoe Avenue, Suite 301
    Boulder, CO 80302

• cancel contract

  I have a lease to own contract on my property. Paragraph 10 states Failure to pay rent when due, at the option of lessor shall (1) terminatethe lease, or (2) require lessee to pay a late fee. Can I terminate this lease using option 1?

  • Re: cancel contract

    Yes, it would certainly seem so, unless thereare somehow other conditions in the lease connected with your right to exercise option 1 which first must be met.

    Michael E. Hendrickson
    Attorney & Counsellor at Law
    211 North Union Street Suite 100
    Alexandria, VA 22314

  • Re: cancel contract

    Absent other facts, (1) would permit the landlord to terminate the lease upon failure of tenant to pay rent. The contract may provide notice requirements and you might want to have an attorney review the agreement.

    Robert Strupp
    Robert J. Strupp,Attorney at Law, PLC
    2325 Dulles Corner Drive Suite 500
    Herndon, VA 20171

• terminating lease option to buy contractmy husband and his ex-wife

  My husband and his ex-wife owned property together, they decided to lease it with option to buy. Contract was signed by all parties giving the leasee 1 1/2 to purchase or terminate agreement, during this time my husband decided to buy-out his ex-wife and keep the property. On April 26,2004 we became the new owners and would like to move into the house what is our legal right as new owners, can we terminate the option to buy and let them continue lease till the end of the lease agreement or do we have to sell to them. The option to buy was just written at the buttom of a lease agreement contract. They did not put any money down.They have continued to pay monthly payment. Can we ask them to terminate the lease prior to Dec. 2005 as stated in the lease agreement.

  • Re: terminating lease option to buy contractmy husband and his ex-wife

    Howdy:The first question is can you move into the house before the end of the lease. The answer to that question is no. When your husband bought out his ex-wife, all he bought was what she had to sell, and that was a leased property. He bought subject to the lease. So, if the lease runs until the end of next year, then that tenant has possession until that time, provided they make the required lease payments.Regarding the option to buy: If no additional consideration was paid ... an option payment ... then it is probably unenforceable. But, one never knows how a court will rule.If, on the other hand, some consideration was paid for the option, then it is enforceable for the term of the option.Hope this helped.rkr

    Robert Restivo
    Restivo Law Firm
    707 El Dorado Blvd, Ste 1502
    Houston, TX 77002

• Lease option to buy

  I have a writen, signed and noterized lease option to buy contract and I'm in an open escrow but the contract has exspired and the owner wont resign the contract for another year when we have that right in the contract to buy or extend. What can I do to have him sign isn't he obligated to resign the contract, specially when we are in a active escrow right now.

  • Re: Lease option to buy

    I answered your question yesterday.

    Robert L. Bennett
    Law offices of Robert L. Bennett
    2117 N. Baker St.
    Bakersfield, CA 93305

  • Re: Lease option to buy

    From what you've said, it would appear that you could file an action in court to require the owner to do what he promised; however, it is impossible to provide a certain answer without reviewing the contract. You need to contact an attorney before you lose your option.

    Cathy Cowin
    Law Offices of Cathy Cowin
    2344 Tulare Street, Suite 300
    Fresno, CA 93721

  • Re: Lease option to buy

    If I understand the facts correctly, the contract is still in effect if you notified him before the renewal date expired that you were exercising the option to extend it one more year, so you do not need him to resign. The contract expires only when all of the terms dealing with its time period length are completed. It is like a major league baseball contract for 3 years with a fourth option year; if the player or team states in the manner required under the contact and within the time deadline set up by the contract that they are newing for the final option year, the other party must honor the contract. What reason does the seller give for not going through with the contract? Have you fulfilled all the terms? If the language of the contract is unclear on how the option for one more year can be renewed, any ambiguity is read against the person who prepared the contract, which probably is the seller [it does not matter if someone else prepared the language and he simply used it]. I doubt they will do it, but see if the attorney for thtr title company will speak to the seller and point out the contract is still binding. Have your broker speak to the seller's real estate broker to pressure the seller to go through with the sale. point out to the seller that housing prices are going down except for the high end properties so if he drags the sale out you will pay him less and you will insist on a full credit for all the rent you have paid since you should be not paying any rent now [buthe may demand that you pick up the mortgage and other payments he has made]. If none of that works, perhaps a sharp letter from an attorney will. It is usually better to have a laocal attorney handle such matters, but if you wnated me to I charge $100 per hour [since I work out of my home,am largely retired, and have little overhead]. If you used a standard form agreement, there probably is a section giving attorney fees to the prevailing party in an action to enforce a sales contract [the fee is what would reasonably be charged and not what actually is charged; if you were awarded fees, which would only occur if the matter went to trial, then my charges would be higher but less than what is awarded]. Good luck and be pushy!

    George Shers
    Law Offices of Georges H. Shers
    4170 Glenwood Terrace, Suite #1
    Union City, CA 94587

• Lease/ Option to previous owner

  I have purchased a property and put a tenant (previous owner) on a lease with an option to buy. Lease Option was recorded. In the contract it clearly states, that if tenant buyers misses payments for 90 days an Option will go away. Well, it's going to be 90 days in October. My dilema is, because Lease Option is recorded, according to Title company we would need to get cancellation from the tenant, to get a clear title. Since the tenant (former owner) is not expected to cooperate, what is the best way of removing Lease Option from Title.

  • Re: Lease/ Option to previous owner

    You will need to file a quiet title action in the court.

    Ken Koenen
    Koenen & Tokunaga, P.C.
    5776 Stoneridge Mall Rd., Suite 350
    Pleasanton, CA 94588

  • Re: Lease/ Option to previous owner

    A quiet title action would probably have to be filed if the tenant fails comply with any term of the option. If the tenant does not pay rent, an eviction action can be filed even though the tenant has a right to purchase the property. We would need to review the entire lease option and any other paperwork to help you. We handle cases throughout California and can discuss your situation by phone after reviewing any faxes to us.

    Larry Rothman
    Larry Rothman & Associates
    1 CITY BOULEVARD WEST, SUITE 850
    Orange, CA 92868