Differences between a "lease w/ option to buy" versus FROR?

[movedfromballard]

Question...

I'm a "seller" in a position where I have someone wanting to rent my home for a period of time... after which they can exercise an option to buy. From what I understand this route differs quite a bit from a standard rental / lease agreement, and a first-right-of-refusal. Can someone explain the legal / technical differences between the agreements? It's m understand that going the lease w/ the option to buy... gives me far less rights as the property owner, in terms of getting them out should they not be a good tenant?

[ira s]

movedfromballard,
I'm not an attorney, so don't take what i say as absolute gospel, and in fact it might pay to use an attorney in this instance.
There are a variety of ways to do a lease option to purchase. The best way to do this from your perspective would be to make sure that the lease document and the option document are separate documents, and to make sure that the tenant is always referred to as " the tenant" rather than a buyer.
If you were to evict the tenant, i think the difficulty would be in he/she claiming that that weren't simply a tenant but had equitable interest in the property, hence my recommendation that you do separate documents.
Typically, there is something like a standard lease agreement, and in addition there is a separate option agreement. The tenant pays a price for this option, normally non refundable, to be able to buy the property at a set price during the option period. sometimes these option periods are one year long and can be renewed.
It can be very advantageous for a homeowner to do a lease option. homeowner, not "seller" because you don't want to establish that the tenant has any equitable interest until he/she exercise their option.
1. An attorney is likely to cost far less than real estate commissions.
2. In a declining market, having an agreed upon price is a good thing.

There are various ways to structure a lease option to buy agreement. to make sure that your concerns are addressed, I'd use an attorney.

[movedfromballard]

Thanks for the info... I've been collecting my thoughts, and will reach out shortly to an attorney.

Rob