What if Your Tenant Walks out on the Lease Option?

A lease option allows an individual to rent a property for a predetermined period of time and, at the end of the time period, opt to purchase the property. Landlords often charge renters an additional fee to acquire a lease option.

The Tenant is Under No Obligation to Buy

Although you are legally bound to sell the property to the tenant at the end of the lease option, your tenant isn‘t legally bound to buy the home. Should the tenant decide that purchasing the home isn’t a wise investment or cannot secure financing for the mortgage, he may walk out on the lease option without penalty.

You Might Be Able to Keep the Deposit

If your tenant paid you for the lease option or made deposits to you that you agreed to put toward a down payment, you may be entitled to retain these additional fees. This depends upon the wording of the lease option contract. If the contract states that opting out of the agreement results in the tenant forfeiting any funds he contributed toward the lease option, you do not need to refund the tenant’s money.

The Tenant Cannot Walk Out on the Lease

Your tenant is bound by the original lease he signed to remain on the property for a pre-set period of time and pay rent to you. Although your tenant may break the lease option agreement, he cannot walk out on the actual lease without penalty. If he does so, you may file a civil lawsuit against him for the remainder of the rent he owes under the original lease.

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