Legal Question in Real Estate Law in California

Re: Lease option to buy contract

Mt. Whipple has given you a thoroughly comprehensive answer. Follow his advice!

Re: Lease option to buy contract

Options are for a specific period of time; if the option period has expired, then you have NO option and the owner does not have to enter into a new contract.

Re: Lease option to buy contract

Just to make sure I understand the facts, here's what I think you are saying: You are a tenant under a lease with an option to purchase the property you're leasing. The option has expired. You've asked the owner (lessor) to extend the option in writing, but he has declined to do so on the ground that it's not necessary. Perhaps he is trying to convince you that an oral agreement to extend or renew the option is sufficient.

If my understanding is correct, or at least close, the answer is that you are in dangerous territory. Generally speaking, options to purchase real estate must be in writing to be enforceable.

Now, I haven't read your lease-option agreement, and it is POSSIBLE that it is self-extending by its own terms beyond an original expiration date. For example, it might read "Tenant shall have the option to buy during the term of this lease, or any extension thereof, at $X." Then, if the owner continued to accept rent, that would extend the lease on a month to month basis and also, at least arguably, the option.

With real estate values falling recently, options are often less valuable that they otherwise would be, and this may make owners more willing to extend expiration dates. In some cases, an option holder might be better off to ignore the option and simply make an offer at current market value, or a bit lower.

Nevertheless, especially if some of the rent paid is applicable to the option price, the option may be worth keeping alive, and if the owner is willing to extend an expired option, I'd push for him to put in writing. Again, an oral option agreement isn't worth the paper it's written on.