Hi Guys, Ive recently been reading up alot in regards to lease options. From your experience what is the best way to explain them to perspective vendors without confusing them?

ANY option triggers the clause regardless of how long the lease is. It is true that leases longer than 3 years without an option trigger the clause too. Here is the pertinent law (I am not a lawyer): Â§ 1701jâ€“3. Preemption of due-on-sale prohibitions

The person giving the lease option or land contract can be called the Vendor. I interput your question to be "how do I convince a seller to sell on owner financing." The best way, in my mind, would be to show them how much more they can make by receiving interest on the loan. Some people will sell this way just to walk away. Offering a decent down payment can help as well.

What "vendors" do you have to explain this to?

Marc hit it on the head! Since many buyers on land contracts or lease options have credit ratings that don't allow for conventional financing the down pmt and a two or three year balloon are what swing the deal. This allows for them to rebuild their credit and get conventional financing. The hitch is that you need to have the underlying lender waive "due on sale" for a LC. A lease option, I believe can be considered a sale, too if it is for a term of three years or longer. We just did one for a home we were selling. The buyer lost his wife, home, etc and filed BK. He had $8,000 to put down. His BK won't be released for 2-3 months so we went lease option w/$8,000 down and pmts based on the land contract terms that we will switch to in a few months plus tax and insurance prorations. Our local lender is on board for a 3 yr land contract. Every one wins! Bill

No need to apologize! We all use different nomenclature for the same things. When I moved to Georgia, it took me a few days to figure out that a "buggy" was actually a shopping cart. I think I'd just explain a lease-option in two parts. First there's the lease, which I'm sure anyone will understand. Second, there's the option, which I'd just explain as a post-dated sales contract, with the only difference being that you're not obligated to close on it. If part of your lease goes toward the sales price, that should be easy enough to explain, too. Perhaps you should consider writing up a one- or two-page document that simply discusses this transaction so that the person can digest it at their own pace. Do you feel that you're losing deals because people just can't get comfortable with the transaction?

My apologies. I refer to the vendor as the seller of the property

Reiss, Welcome to Bigger Pockets! Can you give a little more info about your question? Are you thinking of using this as an exit strategy for any of your properties? I see by your profile that you have done a few deals. Great! Bill

Yeap...I'm confused too. What vendors are you referring to?

Best way to explain Lease Option to Vendor?Best way to explain Lease Option to Vendor?

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Best way to explain Lease Option to Vendor?

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