Question

Betsy Birdsong, an interior designer, has made plans to definitely retire in three years. She has begun to downsize her business and is moving out of the 2,000 square foot commercial condominium she owns in a prestigious business park. Betsy does not wish to sell at this time, so she has decided to offer the condominium as a lease-purchase option. While she hasn't decided on a purchase price, she is adamant about the lease term:   a three-year lease with a two-year option (for the first two years only).  

What is your opinion as to why she would require such a lease term?

Answer 1

Here, Betsy Birdsong has decided to retire in three years but she does not want to sell her commercial condominium at this time. For such situation where you are moving out but does not want to sell the property at the time, a lease purchase option is the best way out.

In my opinion, this type of lease term is the best suitable to Betsy Birdsong in the given situation because of the following points :-

• the seller i.e. Betsy will want the tenant to give a non-refundable payment in advance to "purchase" the option to later buy the property. This is called an "option" payment and it can be any amount. It "locks in" the tenant's option to purchase even if Betsy changes her mind later after 2 years.
• The up-front option payment can increase the return on investment, and it stays with her even if the tenant does not purchase the property.
• She can lock in a reasonable price for the home in advance.
• Offering a lease purchase option can attract responsible tenants interested in long-term occupancy.
• If the tenant thinks he may end up owning the home, he might be more inclined to keep it in good condition throughout the lease period.