Lease Purchase Questions

**DMM8313** · 09-25-2008, 06:12 AM

I have a renter that wants to enter into a lease purchase. I see this as a good thing because in the contract I would like to put that he is responsible for all taxes and insurance. This would take the taxes out of my responsibility with the register of deeds and he can claim the homestead exemption. Here is my concern. The loan is an FHA loan. I cant remove the insurance and taxes from being escrowed by the mortgage company can I? What should i do to get this contract rolling? What can I do.

**Codythebest** · 09-25-2008, 06:23 AM

No, but it will be prorated at closing, if any.
If the place is already rented and you want to sell in no hurry, LP is best IMO. As seller, try to give the minimum toward down payment. Time length is up to your need.

**DMM8313** · 09-25-2008, 06:48 AM

What about homestead exemptions? Can anything be done so that the renter is claiming the exemption?

**jasgator5220** · 09-25-2008, 12:41 PM

I'm confused, which is typical. Lease/Purchase agreements typically are a lease with an option to purchase. If the option is exercised the rent paid through closing is applied to the purchase price.

Typically, you would lose any right to homestead exemption the minute you entered into this contract, because this exemption is for a property owner's primary residence. In your senario the property would be a rental property until the option is exercised, whereupon closing the new owner could then claim this exemption.

In the agreement you can make the renter responsible to pay you an amount equal to the real estate taxes paid. However you as the property owner will still be on the hook to the taxing authority.

Am I missing something?

**DMM8313** · 09-25-2008, 12:49 PM

no youre not i am. What I have described is a land contract! Sorry for confusing the two.

So ill reask the same questions but as a land contract.

**Codythebest** · 09-25-2008, 05:19 PM

Originally Posted by DMM8313

What about homestead exemptions? Can anything be done so that the renter is claiming the exemption?

Of course not. The place is not sold yet. It will be once the renter/buyer will excerce his/her right to purchase. (s)he will be entitle to homestead once on the deed, not before, and in the event (s)he a legal resident.