I want to rent out my house using a lease option. What are the laws for this type of arrangement?

Question

I want to rent out my house using a lease option. What are the laws for this type of arrangement?

Answer

I think an answer to this question needs to address two categories:

First, there are some legal requirements that attach to leases with an option to purchase; they include primarily that the lessor must make the same disclosures that a seller would be required to make, and they must be made before the signing of the lease. See Civil Code section 1102. This section makes the provisions of sections 1102-1102.17 applicable to leases with an option to purchase.

In addition, there is a broad category of legal concepts that should be considered and regarded in drafting a lease-purchase agreement for the benefit and protection of the parties. For the most part, these considerations are not based on laws, per se, meaning statutes passed by the legislature. Instead, these are practical matters with possible legal consequences which the lessor-seller (and the lessee-buyer too, for that matter) should take into consideration when negotiating, drafting and signing a lease-purchase. I would suggest that the parties either hire legal counsel, or at least look up several prior examples of lease-purchase agreements and select clauses that seem to fit your desired deal. One possible source of sample agreements is the paperback self-help law books put out by various publishers including Nolo Press.

Answer

I agree with Mr. Whipple, but I feel that your question requires a lot of in depth discussion that would not fit on a small bulletin board like this.

Answer

I agree with Mr. Roach. Lease/Purchase or Lease/Option agreements are notoriously hard to do right. Most real estate professionals agree that it is virtually impossible to put together a lease/purchase or lease/option deal that is not a bad deal for the landlord or the tenant or both.