Legal Question in Landlord & Tenant Law in Michigan

lease to buy

I am trying to sell my home and some one would like to use a lease to buy. I don't know much about this process. What precent do you use to set rent? Do you have to give credit to them monthly towards perchase? If they change their mind and choose not to buy what would happen to all the deposit and credit money that would be given towards the purchase? If there are damages to the property do we use the depost given for perchase to fix up or do we get a seprate deposit to cover those cost? They would like to use the home and property as a bussiness is this allowed in a lease to own? If they build any new buildings who is responable for the cost and insurance of them? If they brake the lease who is responable for the cost incured by the lessee building any new structures durning the lease time?


Asked on 11/05/07, 1:38 pm

1 Answer from Attorneys
Elizabeth Powell ELizabeth Powell PS Inc

Re: lease to buy

If the house is in WA I can answer your questions, if it is in MI I don't know the answers, I'm not licensed there.

You can ask a local attorney for some help with the contract you select for this. Rent can be whatever you decide. You don't have to give them credit for the payments, but that would reduce their incentive to stay and pay you.

If they decide not to exercise the option, generally they forfeit what they paid.

Real estate contracts are great for owner/sellers, but very harsh on buyer/tenants.

Also, there is an issue about whether you can contract around the RLTA without an attorney for the tenants signing off on the agreement.

You can characterize a "damage" deposit or a "security" deposit, a security deposit is broader.

Whether it is OK to use the residence as a business depends on the zoning regulations. Check with your city/county for more information.

If they build new buildings they'd be responsible; if they breach the lease, the buildings belong to you (the owner) unless you don't want them.

In which case they are waste.

It is smart of you to be asking these questions before getting into this situation. You don't have as big a risk as the buyers/tenants do.

But there are a LOT of rental agreements out there on the internet that are COMPLETELY unenforceable.

You should consider spending a consult fee to make sure you use one that is enforceable.

Hope this helps. Elizabeth Powell

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Answered on 11/05/07, 10:36 pm


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