Lease Option Agreement Policy
The purpose of this document is to establish Lease Option Agreement policies for use by Becton Properties, LLC managers, employees, or agents of the company that are engaged in leasing rental properties.
Changes from prior policy versions are underlined and/or striked out like
Lease Option agreement
Within this document, a Lease Option agreement consists of two distinct components; a lease agreement and an option agreement. An agreement means a properly executed and legally binding contract.
Lease Purchase agreement
Within this document, a Lease Purchase agreement consists of two distinct components; a lease agreement and a purchase agreement. An agreement means a properly executed and legally binding contract. The company will not engage in Lease Purchase agreements, only Lease Option agreements.
A lease agreement specifies the terms and conditions of renting property in North Carolina and the responsibilities of both tenant and landlord. Our agreements, provided directly by Becton Properties, LLC managers, employees, or agents of the company shall follow established General Provisions of all applicable chapters in the North Carolina General Statutes.
A purchase agreement specifies the terms and conditions of acquiring property in North Carolina and the responsibilities of both buyer and seller. Our agreements, provided directly by Becton Properties, LLC managers, employees, or agents of the company shall follow established General Provisions of all applicable chapters in the North Carolina General Statutes.
The option agreement specifies the terms and conditions which grants the option holder (generally a renter who is the "intended buyer") the legal exclusive right to purchase a specific property during a fixed period of time.
The option agreement identifies who paid for the option (option holder), the time frame the option is valid (the option period), the option cost (the compensation received by seller in exchange for the exclusive right to purchase the property), and other contractual obligations.
Scope of Policy
Signed agreements resulting form the application of the policy outlined in this document take precedence. This policy declaration outlines guidelines used by Becton Properties, LLC managers, employees, and agents of the company in creating Lease Option offers and contracts. This policy is not intended to be all inclusive or binding.
Becton Properties, LLC Policy
The company will not provide financing assistance other than provided by a Seller Financing Addendum to a purchase agreement. The company financing will be limited to first or second liens. The company will not enter into "Lease to Own" or "Lease Purchase" agreements that involve significant owner financing.
Transfer of Option
The Lease Option agreement may allow an option holder to assign his agreement to another (third) party. The assignment requires the payment of an assignment fee which can be paid by the option holder or the third party. All other terms of the agreement convey with the Lease Option agreement. The assignment provision and assignment fee should be defined in the Lease Option agreement.
Transfer of Purchase Contract
The purchase contract may not be assigned or transferred other than in concert with the transfer of the option.
Option period extensions
In the event an option holder needs more time to execute the option, the agreement can specify a right to renew the agreement over a specified interval. A renewal requires a new lease agreement and requires the payment of a renewal fee. The option extension renewal term (the specified interval) and option extension renewal fee should be defined in the Lease Option agreement. The option extension renewal fee must be paid before the option expiration and time is of the essence.
Right to Cancel
Becton Properties, LLC shall include a statement in not less than 14point boldface type, immediately above the purchaser's signature, that the purchaser has the right to cancel the contract at anytime until midnight of the third business day following execution of the option contract or delivery of the contract, whichever occurs last.
Buyer Obligations and Forfeiture
The purchaser is required to maintain their lease obligation per the established Lease Agreement. The purchaser shall forfeit their option in the event of a completed summary ejectment, eviction, or other judgement or court order that terminates the purchaser's rights to the property or extinguishes the equity of redemption. Becton Properties, LLC shall provide a statement that the purchaser can cure a default once in any 12 month period during the period of the lease agreement.
Becton Properties, LLC
reserves the right toshall record any or all documents associated with the Lease Option agreement with the applicable county courthouse at company expense. Likewise the option holder may, at option holder's expense, record pertinent documents.
The option fees will be at market rate. The company sets option fees at 2% to 4% of executed option price. The option fees will be paid upon granting of the option or depending on market conditions. In no case will option holder receive an option with less than 50% of the option fee paid on or before granting of the option.
The option period will be reasonably large so the average option holder can complete the purchase. The option period should not be less than 90 days and should be greater than the minimum lease period.
Becton Properties, LLC will provide the option holder, at option holder expense, with the right to inspect the property by a qualified home inspector prior to leasing the property. All inspections and agreement of necessary repairs, if any, will be in writing per the Lease Option agreement.
Purchase terminates lease
Execution of the purchase agreement will terminate the lease. Tenant shall pay rent from lease signing until closing day. Rent paid by the tenant will be pro-rated by the closing attorney to the day the executed purchase agreement is recorded in the applicable county courthouse.
Becton Properties, LLC will price Lease Option properties at "market rent". In cases where the company offers a property for lease or Lease Option, the pricing will be comparable to the going market rate for each offering. Differences in the pricing between lease and Lease Option, if any, will be a factor of the market for these offerings as interpreted by Becton Properties, LLC managers, employees, or agents of the company.
Becton Properties, LLC will not provide "rent credits" usually associated with options on property with above-market rent pricing. Saving via a rent credit, in which a percentage of rent applies toward the purchase of the property, must be achieved by the tenant with an alternate means.
Becton Properties, LLC will not offer a Lease Option agreement without a completed application and supporting financial qualification documents. The company will not offer a Lease Option agreement if applicant has experienced a recent bankruptcy or foreclosure.
The company will verify that the option holder will be "financially capable and probable" of following through on a Lease Option by using a third party resources such as loan officers, loan brokers, personal bankers, etc.
Becton Properties, LLC will disclose to Lease Option applicants prior to signing any documents that a Lease Option agreement carries risk. At a minimum, the following should be disclosed. The option holder must qualify for a home loan prior to acquiring the optioned property. If the option holder can not qualify for a loan in a timely manner, the option holder may exceed the option period and the option may expire. Also, in the event the option holder can not qualify for a loan, there is no guarantee that the option holder will find another party to assign the option to. There is no guarantee that the property will appreciate in value (and be "in the money"); the option execution price may be above the market value of the property making the option worthless or near worthless.
When policy is changed
We provide a policy version and effective dates as part of all of our written policies. Material policy changes are communicated via our website. Version and date information are identified at the bottom of policy statements.
Questions or Comments
Please address all questions and comments about our Lease Option agreement policy to
$Date: 2010/08/18 17:35:02 $ $Revision: 1.3 $