The owners of Group 15 Real Estate have been involved in Lease Purchase, Contract for Deed, Owner Financing and all sorts of creative financing deals for over ten years as real estate agents, loan officers, investors and even buyers. Here is the bottom line: it has inherent risks (do not let anyone tell you differently). Furthermore, as the real estate market has struggled, this market for "creative financing" has become more popular and has even garnered the attention of the North Carolina General Assembly.  As we have navigated the tricky waters of Lease Purchase we have learned a lot and have settled into a business model that relies on utter simplicity.

HERE IS A LIST OF A FEW OF THE PROBLEMS WITH LEASE PURCHASE AND OUR SIMPLE SOLUTIONS:

Seller, what if you have to evict the tenant?

• The Problem: Almost all lease-purchase deals will tie the lease to the purchase option.  The reason for this is because if the tenant defaults on the lease then the seller wants to reserve the right to unilaterally cancel the purchase option.  But, there is a problem with this.  When seeking an eviction, if the judge sees that the lease and purchase option are tied together in anyway then he will immediately kick the case to a higher court where now, instead of evicting, you have to foreclose.  So, instead of having to deal with a six week eviction process, you now have to deal with a six month or longer foreclosure process.  This will involve expensive attorney fees and months of lost rent and probably damage to the property.
• Common Solution: Lease Purchase companies will try to wiggle around this anyway possible with varying contractual language.  But, the bottom line is that the North Carolina General Assembly put an end to any ambiguity on this topic with the passage of the Homeowner and Home Buyer Protection Act in 2010.  If the company you are considering hiring to help you with a Lease Purchase is not intimately familiar with this Act and all of its pitfalls then run away.  We are very familiar with this act and have adjusted our business model accordingly to protect you.
• Our Simple Solution: Instead of seeking a large non-refundable option fee that is tied to the lease we actually encourage a small non-refundable Due Diligence Fee that is in no way tied to the lease.  We have trashed all of our prior "attorney approved contracts" that tried to skirt this problem and have instead opted to just stick with the standard NC Real Estate Commission Lease and Purchase Contract.  We treat the lease and purchase as entirely separate transactions.  This prevents any major problems as described above.  The only new risk that comes with doing it this way is if it becomes necessary to terminate the lease, then you cannot sell the house again until the original buyers due diligence period has expired.  We understand that some of these things involve "industry jargon" and may seem overly technical.  But, that is all the more reason it is very important and we would welcome the opportunity to discuss it with you further.