STRATEGIES Option Helps Renters Become Buyers ALL EDITIONS

• Published in: Newsday
• Main Author: By David Kalish. David Kalish is a free-lance writer
• Format: Newspaper Article
• Language: English
• Published: Long Island, N.Y Newsday LLC 18.02.1989
• Edition: Combined editions
• Subjects: Sanders, Elizabeth; Serota, Irving

While these agreements often apply rents toward the purchase price, they also can include stiff financial penalties if the tenant chooses not to become a homeowner. Moreover, rents in lease-buy deals generally are jacked up to make it worth the landlord's while to temporarily take the property off the market. "What really happens is the tenant agrees to pay the seller a set amount of money for the right to purchase the property should he so choose," said Bonnie Lazar, vice president for Suffolk of the Long Island Board of Realtors. There's also the important question of whether the real estate broker can collect commission twice during the lease-buy transaction - once from the renter and once from the seller should the purchase option be taken. This question should be carefully addressed by each party's attorney. Generally, brokers agree to return part or all of their commission from the renter who exercises the option to buy. Such a contract may stipulate that one month's rent - the standard broker's commission - be credited to the tenant if the same agent participates in the sale. As homeowners competing for a shrinking pool of buyers turn to more creative deals, the number of variations on the lease-option theme are sure to grow. One arrangement that has gained a small following in recent months links individuals of qualifying incomes who can't afford the down payment with investors who put up the money.