Lease Option Agreement - Legal Draft

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LEASE OPTION AGREEMENT

This LEASE AGREEMENT WITH OPTION TO PURCHASE REAL ESTATE (hereinafter

referred to as the “Lease/Option”)

is made on this _________ day of ____________________________, 20_______,

by and between the following parties:

_______________________________________________________________________

_____ and or nominee.

Address:

____________________________________________________________________________

____

_____________________ Phone: _________________ Fax: _________________

Email: _________________

(hereinafter referred

to as the “Tenant/Buyer”);

And

_______________________________________________________________________

__________________

Address:

____________________________________________________________________________

____

_____________________ Phone: _________________ Fax: _________________

Email: _________________

(hereinafter

referred to as the

“Landlord/Seller”).

In consideration of the mutual promises and covenants herein, the parties

hereby agree as follows:

(1) DESCRIPTION: The Landlord/Seller agrees to lease, and the

Tenant/Buyer agrees to rent the real Property and

improvements, located at:

_______________________________________________________________________

___________________

Legal Description

_______________________________________________________________________

___________________

_______________________________________________________________________

___________________

(hereinafter referred to

as the "Property".)

(2) TERM: The term of this Lease/Option shall be for a period of

___________ months commencing on

_______________________, 20___, and ending on

______________________________, 20 ____.

The term will be automatically extended for __________________ periods

of ______________ months, unless the Tenant/Buyer gives notice to the

Landlord/Seller of its intent to terminate this Lease/Option, by

mailing a written notice to the last provided address of the

Landlord/Seller, or until such time as Tenant/Buyer exercises its

option to purchase the Property. Liability for payment will not extend

beyond notice to terminate this Lease/Option.

(3) ACCESS: The Tenant/Buyer will have access the Property on

________________ to put signs, advertize, and show to other

prospective Tenants/Buyers or Contractors. The Landlord/Seller also

hereby grants the Tenant/Buyer permission to apply for all permits,

zoning changes, grants, for the Property which the Tenant/Buyer deems

necessary at the total expense to the Tenant/Buyer.

(4) RENT: Tenant/Buyer agrees to pay the lender of Landlord/Seller’s

current mortgage or trust deed, the sum of $________________ per

month, with the first payment beginning _____________________, 20 ___

as rent for the Property, for the term of this Lease/Option, and

during any extension thereof. All rental payments shall be due and

payable in advance of the 1st day of each and every month. An amount

equal to $__________________ for each month in which rent was paid,

shall be credited to the Tenant/Buyer and applied to the purchase

price of the Property in the event that the Tenant/Buyer exercises its

option hereunder.

(5) OPTION TO PURCHASE: The Tenant/Buyer, as part of the consideration

herein, is hereby granted by the Landlord/Seller the exclusive right,

option, and privilege of purchasing the Property at any time during

the term of this Lease/Option or any extension thereof.

(6) LIQUIDATED DAMAGES: Should Tenant/Buyer default on this

Lease/Option, Landlord/Seller shall keep all monies paid as liquidated

damages.

(7) COVENANTS OF TENANT/BUYER: Commencing with entering the term of this

Lease/Option, including extensions, the Tenant/Buyer hereby covenants

and agrees as follows:

(A) That the Tenant/Buyer will pay all utility charges and bills,

including, but not limited to water, sewer, gas, oil, and

electric, which may be assessed or charged against the Property.

(B) That the Tenant/Buyer will not use the Property for any unlawful

purpose and that the Tenant/Buyer will conform to and obey all

laws, ordinances, rules, regulations, requirements and orders of

all Federal, Provincial, and Local governmental authorities,

agencies, departments, bureaus, boards or officials, respecting

the use of the Property; and

Property, at the end of the term or any extensions thereof,

should the option herein not be exercised, in as good order and

condition as the same now exists, reasonable use and natural

wear and tear excepted.

(8) COVENANTS OF THE LANDLORD/SELLER: The Landlord/Seller hereby

covenants and agrees as follows:

(A) That the Landlord/Seller shall pay for and maintain fire and

extended coverage insurance on the Property in minimum amount of

$__________________________. The Tenant/Buyer shall be named as

an additional insured or loss payee on the insurance policy and

copy of which shall be provided to Tenant/Buyer. The

Landlord/Seller will use this insurance to cover any

items/repairs/damage/water damage. In the event the Property

becomes uninhabitable this term the Tenant/Buyer will be

released from all rent liabilities until the Property is

habitable and is re-let. The amount of time that the Property is

uninhabitable will be the time period that will be added to this

Lease/Option.

(B) That the Tenant/Buyer is entitled to the quiet enjoyment of the

Property without any interference or interruption by

Landlord/Seller or its representatives. The Landlord/Seller or

agents will enter the premises at reasonable times and upon

reasonable notice for the purpose of inspecting the premises.

The Landlord/Seller agrees not to call, stop by, or visit the

Property without the Tenant/Buyer consent. Consent cannot

unreasonably be withheld.

(9) COSTS OF IMPROVEMENTS: In the event the Tenant/Buyer exercises the

option to purchase set forth in paragraph

4, above, and through no fault of the Tenant/Buyer, the

Landlord/Seller fails to convey said Property to Tenant/Buyer in

accordance of the terms of this Lease/Option, the Tenant/Buyer, in

addition to any other rights which Tenant/Buyer may have in law or

equity for the enforcement of Tenant/Buyer’s option to purchase, shall

be entitled to reimbursement for the cost of all repairs, maintenance,

and improvements.

(10) FURTHER ENCUMBRANCES: The Landlord/Seller hereby warrants the total

of the leases, options, mortgages, liens, taxes, and any other

encumbrances against the Property, whether of public record or not, is

as follows:

(A) A first mortgage in favor of___________________________________

in the approximate amount of

$____________________________________.

(B) Other liens (specify):

The Landlord/Seller shall not lease to any other third party, nor to

assign, sell, option, transfer, pledge, or otherwise to convey any or

all rights or interests had by Landlord/Seller in the Property or in

this Lease/Option, nor to further encumber the Property nor allow the

same to occur. Violation of this paragraph shall be considered a

material breach of this Lease/Option. The Landlord/Seller further

agrees to keep all mortgages, liens, taxes, or other encumbrances on

the Property, current and in good standing, Tenant/Buyer shall have

the right to make payment on same in the event that Landlord/Seller

becomes delinquent or otherwise defaults on such payments, and

Tenant/Buyer may at its option either reduce its monthly rent in the

amount of the payments, or subtract the amount of the payments plus

fifty (50%) of these costs from the balance due Landlord/Seller at

closing of the sale of the Property.

(11) RIGHT OF ASSIGNMENT: The Tenant/Buyer may sublet the Property,

and/or assign, sell, transfer, pledge, or otherwise convey any or all

rights or interest which the Tenant/Buyer may have in the Property or

in this Lease/Option. Any such assignments will release original

Tenant/Buyer from any and all liability and substitute assignee in

his/her or its place.

(12) MAINTENANCE AND REPAIRS: The Tenant/Buyer accepts the Property “as

is” on the date of execution of this

Lease/Option except for items listed in paragraph 14. As of the

effective date, the Tenant/Buyer shall be responsible for all

maintenance and repair upon said Property, both interior and exterior.

The Tenant/Buyer shall have the right to make such repairs,

maintenance, and improvements as Tenant/Buyer shall deem necessary,

proper or desirable.

The Tenant/Buyer shall pay the costs of all such improvements, except

that any roof, electric, plumbing, heating or cooling system that is

not in workable condition at the inception of this Lease/Option will

be repaired by the Landlord/Seller at its expense within ninety (90)

days notice from Tenant/Buyer. If the Landlord/Seller refuses to make

such repairs, Tenant/Buyer will have the option of either voiding this

Lease/Option by written notice to the Landlord/Seller or making such

repairs and, (a) receiving a reimbursement from the next monthly

payment or payments due the Landlord/Seller or, (b) receiving a credit

against the purchase price plus interest at 15% per annum compounded

annually from date of Tenant/Buyer invoicing the Landlord/Seller.

(13) BINDING AGREEMENTS: The parties hereto agree that this

Lease/Option comprises the entire agreement of the

parties and supersedes all prior written or oral agreements,

representations, warranties, negotiations, or understandings. This

Lease/Option may not be amended except in a writing executed by all

the parties hereto. The parties further represent and warrant that

they have not relied on any representations, warranties or statements

as an inducement to entering this Lease/Option other than what is

expressly written herein. This Lease/Option shall be binding upon the

parties, their heirs, executors, administrators, personal

representatives, successors, or assigns.

(14) SPECIAL PROVISIONS:

(A) The Landlord/Seller will complete the following

by________________________ or this Lease/Option will become null and

void and all monies paid by Tenant/Buyer will be immediately refunded

by Landlord/Seller or, at Tenant/Buyer's option, Tenant/Buyer may

accept the Lease/Option and completed the items listed below, and the

cost of same will be recovered as provided for in paragraph 12:

_______________________________________________________________________

________

_______________________________________________________________________

________

_______________________________________________________________________

________

_______________________________________________________________________

________

(B) A TITLE SEARCH will be ordered immediately by the Tenant/Buyer.

This cost will be borne by the Tenant/Buyer unless it is discovered

that Landlord/Seller has unmarketable title in which case the

Landlord/Seller will reimburse Tenant/Buyer to cost of the search. If

the title is unmarketable the Tenant/Buyer will then have the option

to void this Lease/Option or proceed as agreed herewith.

OPTION PURCHASE TERMS

(15) PRICE AND TERMS: The Tenant/Buyer agrees to pay for said Property the

sum of $ ___________________

_____________________________________________________ less any sums

for which the Tenant/Buyer is entitled to claim as reimbursement or

offset in accordance with this Lease/Option; the net sum to be paid in

cash, certified check, mortgage, or cashier's check at closing.

(16) INCLUDED IN THIS PURCHASE: The Property shall also include all land,

together with all improvements thereon, all appurtenant rights,

privileges, easements, buildings, fixtures, heating, electrical,

plumbing, air conditioning fixtures and facilities, window shades,

venetian blinds awnings, curtain rods, screens, storm windows and

doors, affixed mirrors, wall-to-wall carpeting, stair carpeting, built-

in kitchen appliances, bathroom fixtures, radio and television

aerials, landscaping and shrubbery, water softeners, garage door

openers and operating devices, and all utility or storage buildings or

sheds, range and refrigerator. The Property shall also include the

following items:

_______________________________________________________________________

_________

_______________________________________________________________________

_______________

_______________________________________________________________________

_______________

(17) TITLE: The Landlord/Seller shall convey marketable title to the

Property with the above described inclusions, by

General Warranty Deed free, clear, and unencumbered except existing

mortgages, restrictions, and easements of record shown in paragraph

(18) CLOSING: If the Tenant/Buyer elects to purchase the Premises and

Property, he shall give written notice to the Landlord/Seller no less

than 60 days prior to the expiration of the Lease/Option term, or

intended purchase date, whichever first occurs in time, signifying his

intentions. The deed shall be delivered and the purchase money, cash,

check and or mortgage shall be paid at a time and place of

Tenant/Buyer's choice, no later than 60 days after notification to the

Landlord/Seller of the Tenant/Buyer’s exercise of the option.

(19) COSTS AND PRORATIONS: The following items shall be prorated the

Landlord/Seller and the Tenant/Buyer as of

date of closing:

(a) All real estate taxes and assessments;

(b) Interest on encumbrances assumed or taken over by Tenant/Buyer

with both parties having responsibility for such items as

follows:

Landlord/Seller will pay: Tenant/Buyer will pay:

_______________________________________

___________________________________________

_______________________________________

___________________________________________

_______________________________________

___________________________________________

(20) INSURANCE: While this Lease/Option is in effect, the Landlord/Seller

will name the Tenant/Buyer as additional insured. During the term of

this Lease/Option the Landlord/Seller shall maintain fire and extended

coverage upon the Property, and immediately convert the owner occupied

(if applicable) policy to a non-owner occupied policy. In the event of

the entire or partial loss, damage or destruction of the Property, the

Tenant/Buyer may at its option (a) proceed with the closing and accept

the insurance proceeds for said damage, or (b) declare this

Lease/Option null and void, releasing both parties from any

obligations hereunder, except for the return of reimbursable expenses

previously paid by Tenant/Buyer which amounts shall become immediately

due and payable from the insurance proceeds. Tenant/Buyer shall be

responsible for obtaining fire and extended coverage insurance on the

Property effective on the closing date.

(21) TIME IS OF THE ESSENCE IN ALL MATTERS OF THE AGREEMENT

IN WITNESS WHEREOF, the parties hereto, have set their hands to this

Lease/Option on this

___________ day of _______________________________, 20___

WITNESS:

___________________________________________

Landlord/Seller witness Landlord/Seller

___________________________________________

Landlord/Seller (print name) Landlord/Seller (print

name)

___________________________________________

Tenant/Buyer witness Tenant/Buyer and or

nominee

___________________________________________

Tenant/Buyer (print name) Tenant/Buyer (print

name)