Lease option to buy
I have an option to buy in my lease. The clause states that I have the option to buy for the landlord's principle loan amount at any time during the term of the lease. That's it. I make the house payment and have been living there for 2 years. I now want to sell this house and use the equity for a down payment on my new house. I have qualified for a loan but I need the equity for down payment. Do I have to get permission to sell from the landlord? Will I get the equity directly? Will this lease clause hold up and what are my rights here? Thanks for any help.
1 Answer from Attorneys
Re: Lease option to buy
Currently all you have is a lease, so there is no "equity" to obtain. In order to obtain the "equity" you must buy the house. Give the owner notice of your intent to buy the house, arrange for the financing to purchase the house and then close. After buying the house you can sell it. That is the only way to obtain the "equity". After selling your home you can buy the house you want. your biggest problem then will be an income tax issue on the profit you make on the sale of the first home. there are certain tax rules that apply on short term sales and you are probably creating a taxable event. There are also tax exemptions that can be used on a once in a lifetime basis if this new home is your last home. I am not an expert in tax so I would recommend you contact one in planning out these steps. As you can see there is more involved than can be answered on a free internet site where no real advise is given. Hire some professionals and get the correct answers for your situation so that you do not make a serious financial error.