Lease – Option Information

Please scroll down for references below the following example

Example of a Lease-Option Transaction

• Lessee agrees to pay $300 per month to lease the MH for 8 years.  Lessee is responsible for maintenance, taxes, and insurance.
• Lessee also pays $1,500 at the beginning of the lease for the option to purchase the MH during or immediately after the lease term.
• Purchase price alternatives are
  $19,000 at the end of 2 years
  $14,000 at the end of 5 years, and
  $ 4,500 at the end of 8 years 

If Lessee exercises the option, the cost of the option ($1,500) will be deducted from the purchase price.

• If Lessee exercises the option at the end of the 8 year lease, lessor may, but is not obligated to, accept the remaining balance in twelve payments of $250 each. If lessor agrees to accept those payments over time, lessor surrenders the MH title to lessee in return for an unsecured promissory note.

References:

Listed below are various references for Lease-Option “financing”, the SAFE Act, the Dodd-Frank Act, presentations by Spencer Roane, and an excellent text on regulations that apply to mortgages, seller-financing, and other consumer credit and finance transactions.

Mortgage Lending, Principles and Practices – by Hondros Learning
Excellent text on regulations that apply to mortgages, seller-financing, and other consumer credit and finance transactions. Used in SAFE Act Mortgage Loan Originator license class.