Is a Lease option with no set price or end date possible?

Question

Hi all, I would love to get some input on a cottage I am trying to purchase. This needs to be a win win for both me and the home owner.

I am working with a homeowner in NC who is willing to let me Lease a run down cottage on his property with the option to purchase the entire property including the main house in the future, when he is ready to move out. The town zoning will not allow us to separate out the cottage from the main home.

The owner is 75 years old an his health is not great. The Cottage needs a lot of work. The property is in a great location and has fallen in disrepair as his health has declined.

Here are the things that make this tricky;

The owner does not want to name a sale price for the property since prices are currently going up.

. There is no set date for the end of the lease.

He wants to keep control of the property and knows he will probably eventually need the money from the sale to cover assisted living.

Since I will be putting money into the Cottage I would want that money to be deducted from the sale price of the home.

Does this sound doable? Can language be written into a regular lease option agreement to address these things? Should I have an attorney draw this up?

Any suggestions would be greatly appreciated.

Thank you for the input.

Alex

Bill B. · Answer

You’re just a renter.

Without a set price what good does a credit do you? Sure. I’ll give you the $10,000 you spent on the property off your purchase price. The purchase price is $1,010,000. So you owe me $1million to purchase.

Without an end date is the agreement month to month? He can cancel the deal anytime he wants? Or is it not cancelable and he can make you rent for the next 50 years?

Account Closed · Answer

We are looking at a lease option, not a rent to own. Sub2 does not work since there is no loan on the house.

As you said, makes me wonder if he is serious.

thank you for your input.

Bria Johnson · Answer

What do you mean by lease option if not interchangeable with rent to own? Forgive me if this seems like a silly question (and a little embarrassing since lease-option has been my primary strategy since I've started real estate ) but In my market, we use them interchangeably and this is my first time hearing someone refer to them as two different things. Looking to learn something new.

Shiloh Lundahl · Answer

Option agreements have set a time frames. They don’t necessarily have to have surprises. I have what are called floating lease options. They adjust with inflation, but they also have a set floor.

Bria Johnson · Answer

It seems like the seller wants a long-term tenant and not a true rent-to-own agreement.

It is not a deal I would enter as there seems to be too much risk. Although there are risks in all deals, having too many unknowns in a common agreement (ie: option price, date you can exercise the option), does not seem worth it. I would def run this by an attorney if you want to attempt a solution to this.

I wonder if this could be a sub2 deal (I am unfamiliar with the particulars of sub 2 deals, but just want to throughout another option).

IMO- the homeowner does not seem serious to enter into any agreement.

Wayne Brooks · Answer

No, this makes no sense and would not be enforceable.

You have to have some kind of end date, or it would be found to be unenforceable. With no set price, or some vehicle such as an appraisal to set a price, it would end up only happening if both parties Agreed to a price when the time came, if it ever does.

Is a Lease option with no set price or end date possible?

Is a Lease option with no set price or end date possible?

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