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Hi all,
I understand exactly what selling on a lease option is. I am getting a little confused when I hear the term selling on a “contract for option”.
Are these 2 terms the same?
Are they the same except that you could also sell on a contract for option without a lease meaning the optionee doesn’t occupy the property?
If someone can clarify this it will be appreciated.
thx/rafael
Rafael,
In a contract for option, the optionee does not get an option upfront, but instead buys the option over time. The contract states that the optionee will get the option after a fixed number of payments has been made.
There is usually a lease involved so the optionee also has right of possession.
As I understand it, this arrangement avoids transferring equitable title to the tenant (who usually has a small amount invested) so there is no need to foreclose, but evict in case of nonpayment of rent (some jurisdictions require foreclosure for L/O).
Take a look at Jack Shea & Mark Warda’s book “Secrets of Lease Option Profits” or see Jack Miller’s book from his option seminar for more details.
Pedro Machado
A contract for option is legal in Texas — HOWEVER if it is used in conjunction with a lease there could be a problem because of the new lease option and executory contract laws.
For more details, read HB 1823 and you can see this comnentary from my attorney Bryan Dunklin here:
http://www.jeremybrandt.com/jeremy_brandt/files/leaseoption_commentarydunkleman.docJackie
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