Michigan Lease to Own (Option to Purchase) Agreement

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The Michigan Lease to Own (Option to Purchase) Agreement documents the contract formed when combining a standard residential agreement and purchase agreement. This is done by addressing the issues of both agreements across several sections. Each section will cover a specific subject matter. In some sections, information from a preparer will be required to further define this agreement. It is crucial to the success of this contract this information be an accurate reflection of the specifics both parties have discussed and agreed to.  The signature of each party on this contract form will signify that both parties will adhere to the agreement they have made.

It should be kept in mind, that while the Tenant will have the opportunity to purchase the property they are leasing, he/she is not necessarily obligated to. If the Tenant decides they will not purchase the property within the time period allotted, a certain amount of money (in the form of higher rent and an option fee) will be forfeit to the Landlord. This will compensate the Landlord for his/her investment of time. If the Tenant does wish to purchase the property, however, he/she will receive this money as a credit towards the purchase at the time of purchase. Regardless of the Tenant’s decision to purchase the property, once signed this will become a legal contract binding each party to its conditions by their signatures.

How to Write

Step 1 – In the first paragraph, enter the date of the agreement, the Seller/Landlord’s full name, and the Buyer/Tenant’s full name on the blank spaces provided, in that order.

Step 2 – In the second paragraph, enter the county this property is located on the first blank space. Then, on the second blank space enter the city where this property is located. On the last blank space, enter the address of the property being leased/bought.

Step 3 – The first item, “Rent,” will require the yearly rate of rent entered on the first two blank spaces (first written out, then as a dollar amount). The second set of blank lines will require the monthly rent entered in the same fashion. In the last set of lines, enter the security deposit amount the landlord will require.

Step 4 – The second item, “Utilities and Services,” requires the utilities/services the Tenant shall furnish the property while occupying it. Then, on the second set of lines, list the utilities/services the Landlord shall supply the property while the lease is in effect.

Step 5 – The next item requiring attention is labeled “Option Term.” In this section, define the time period when the Buyer/Tenant may choose to purchase the property. Do this by entering the first date this option is available on the first blank line; then enter the last date this option is available on the second blank line.

Step 6 – In Item 6, enter the amount the Buyer/Tenant paid the Seller/Landlord for having the option to purchase this property.

Step 7 – In Item 7, “Purchase Price,” define how much the property will cost the Buyer/Tenant should he/she wish to purchase it on the first set of blank lines. Then on the second set of blank lines, report the amount from the rent payments that shall be applied as credit in the Buyer/Tenant’s favor at the time of purchase.

Step 8 – Locate Item 17, “Governing Law and Venue.” Here, enter the county that will hold jurisdiction over both the lease and the purchase of this property.

Step 9 – In Item 21, the Seller/Landlord will have the opportunity to enter this agreement by signing and printing his/her name. Below this area, the Buyer/Tenant shall be granted the opportunity to enter this agreement by signing and printing his/her name. There will be enough room for two Seller/Landlords and two Buyer/Tenants however there is no limit to this. If more parties are involved include a labeled line for them to sign and print their names. Below this area will be a set of lines for any agent involved to sing and print his or her name as well as a set of lines for a witness to sign and print his/her name.

 


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