Structuring a Lease Option

5 Replies

Can someone please clarify for me the steps to doing a lease option, both sandwich and wholesale (assigning) LO? What I am still confused about is the paperwork needed for the seller and for the tenant-buyer in either scenario (SLO & WLO).

Here's what I've read/watched/gathered as far as paperwork:

1) enter into a lease option agreement with seller that is assignable

2) have separate lease agreement and option agreement with tenant-buyer

3) have 3 separate docs with each party: lease agreement, option agreement, and purchase & sale agreement (this was the first I've heard about having 3 agreements)

Which is it?? Here are my questions:

With the SELLER:

- do I combine the "lease" and "option" on one document? why or why not?

With the TENANT-BUYER:

- if I am assigning my rights to LO from seller, and collect a non-refundable option consideration, how do I market that "the option consideration will go towards the purchase price" since I won't be around at that time? (some examples with numbers would greatly help)

In GENERAL:

- I recently saw that the exercise of the option to purchase should be done with a closing attorney. if I do a sandwich LO, what docs do I send the attorney?

**Note: I've done several assignments, double closes, JV's, sub2, buy & hold, fix & flips. This will be my FIRST ever LO and I just wanna get this straight.**

Thanks in advance.

The sandwich lease and the cooperative assignment, (often mistakenly referred to as a wholesale lease option), are two very different strategies which require two different sets of agreements.

Hi Dara, for #3 when acquiring the property from seller i dont really care if the agreement is seperate or not. I try to work in an automatic extension of the lease though. On the selling side however, its best to seperate the Lease from the Option to purchase agreement so its easier to evict the "tenant" buyer if need be. I hope this helps

One more thing about what to send to attorney. I would focus on finding an attorney that understands these types of transactions. You can link up with one at GAREIA Mr Harlan for example and then let him tell you what is all needed. At least that was my approach on many similar situations. Good luck my Naija sis!