How to Close a Lease-Option Transaction with Ease
When I bring an "end" tenant/buyer to you that wants to buy your home, the fun begins. Negotiation will begin and all of the necessary paperwork will be drafted or supplied by both parties to make the transaction complete.
The "end" tenant/buyer will provide you with the following:
1. Their W2's, pay stubs, tax returns, and/or bank statements showing their income and ability to pay on time.
2. They will provide a background check showing they have no convictions.
3. Proof of money to close (their Option and rent money).
Buyers will want to see documentation from you as well. They want to be assured that the home they are about to buy is not in foreclosure, that payments are on time, that they will be in the future, and that the entire transaction is legal and protects both sides equally.
You should expect them to speak with an attorney and have all contracts and documents reviewed and for them to request that you provide the documentation below proving you will be a landlord/seller they want to rent/buy a home from.
Items your "end' tenant/buyer may request from you are:
1. Documentation showing clean title
2. Documentation showing there no IRS/state tax liens
3. Documentation showing the mortgage is up-to-date
4. Documentation showing the property taxes are paid
5. They will want their lease agreement reviewed by an attorney
6. They will want their purchase agreement reviewed by an attorney
7. They will want their Option agreement reviewed by an attorney
8. They will want to record a Memorandum of Option with the county
9. They will want an Affidavit of Liens - Shows there are no liens
10. They will want to have mortgage bank authorization
11. They will want you to provide a lead-based paint disclosure
12. They will want you to provide a seller disclosure
13. They will want to see owner's proof of insurance
14. They may want to request that there be automatic payments for the mortgage made directly by them to avoid being foreclosed on in the future
I recommend you discuss the above with your attorney once we begin and be prepared to furnish any of the above mentioned documents to your future tenant/buyer upon request. This will save time, make the tenant/buyers feel at ease, and make for a quick and smooth closing of the transaction.