Can my landlord renege on our lease-with-option-to-buy contract?


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Dear Real Estate Adviser,
I have a lease-option contract with my landlord, but I discovered that he is considering selling the house outright to another party. Can he do this and render my lease-with-option-to-buy contract with him null? Can I get my money back?
— Joe U.

Dear Joe,
He can sell it out from under you — read, “get away with it” — if you don’t have the means to fight him. At least, that’s what this presumably self-serving owner/landlord may be banking on.

Lease option

A contract in which a landlord and tenant agree that, at the end of a specified period, the renter may buy the property. The tenant pays rent plus an additional amount each month. At the end of the lease, the renter may use the cumulative extra payments as a down payment.

Also called rent option, lease-to-buy option, rent-to-buy option, lease with option to buy, lease with option to purchase.

Turnaround creates opportunity

My guess is the local home-sales market has suddenly heated up and is now a seller’s market, unlike when the owner inked that rent-to-own accord with you. Most such lease-option agreements last 2 to 5 years, and your market would have still been in the doldrums 4 to 5 years ago.

Lately, perhaps, the owner got a discreet but generous offer on the house you’re occupying and he’s probably thinking, “Hmm. I can get 15 to 20 grand more than my deal with my renter; if I renege, he can’t afford to sue me.”

Read the accord

Assuming your lease-option contract is in order, however, and you haven’t failed to make a payment or perform required maintenance, or neglected to comply in any way, then you’re still in your rights to execute the contract. And the owner, by the way, is attempting to do something illegal, or so it seems.

First, study your contract carefully because lease-option accords are often landlord-loaded with unforgiving, or at best, ambiguous language. Some rent-to-own sellers will slip in requirements saying buyers must qualify for a mortgage by a set date or the deal is broken. Is there such a date on your contract? If so, has it come and gone? Whatever the case, the landlord may believe (or at least hope), he has a “gotcha” there somewhere.

Ask, don’t wonder

The fact that the guy hasn’t talked with you about these plans doesn’t bode well, either. You need to call him about the rumors. If he fails to respond, send him a certified registered letter, return receipt requested. He will at least know you’re serious about your investment. And I say investment, because in most lease options, an option price is paid either upfront or accumulates via rent premiums added to the base rent. Those monies are typically applied to the purchase by the owner, along with a small portion of the base rent paid.

That money, at least hypothetically, is supposed to be credited at the time of settlement for your use as earnest money, down payment or closing costs. If you’ve been at this upward of 5 years, you may have $10,000 or more accumulated.

Consider legal action

If it looks like the owner is going to play hardball, tell him your next step will be to file notice with the county clerk to cloud his property’s title until you are made whole.

Before it comes to this, the owner may offer to rebate you the option money or any down payment monies otherwise proffered to him, or both. You will have to decide whether it’s worth it to stand your ground.

Alternatively, a civil court suit is a possibility, and a judge may indeed rule in your favor if you’re fully paid up and have maintained the property and otherwise dutifully doled out the monies which constituted a down payment for you.

Possible resources

Go to for a list of local consumer protection offices or state regulatory agency licensing board that has jurisdiction over sellers. is a good source for tenant rights issues.

Good luck in keeping what’s yours!

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