An Assigned Lease-Option in residential real estate is a specific type within the broad category of transactions with a Lease with the Option to Purchase a home on preagreed terms, within our range of real estate deals on terms.
It refers to a legal arrangement where a Real Estate Investor enters into a Lease Option Agreement with a Property Seller and then Assigns that Lease Option to another buyer, usually with a markup or a fee to realize a profit having setup the deal as a facilitator.
The bundle of rights transferred consists in the position in the original Lease Option contract with the Owner of the Property or with the Buyer or, alternatively, it consists in the position in the Agreement with the Buyer.
The transfer of such rights happens with an Assignment agreement, with both parties, Owner and End Buyer on Lease-Option.
Whatever the position, the exact Rights and Obligations transfer and put Owner and End Buyer (on a Lease-Option) in a direct relationship with the removal of the real estate investor whose exit is definite, upon approval by the parties of the new Lease-Option Agreement.
It differs from the Mediated Lease-Purchase as the deal becomes completely owned by the sellers who are the only one in control of the lease-option on the owners' side, while the buyers deal directly with the
Based on this setup, the owner will have a turnkey lease-option deal; it's ideal for the sellers who don't want or can't market the property on terms and design a deal on terms. Tired landlords are great candidates, but so are those who want or need to extract as much equity and value as possible from the deal. Other categories of sellers are good candidates, as those who want direct and total control of the relationship with the end buyers, or the buyers themselves, for whatever reason, may want such direct relationship.
Typically, the deal goes into effect with the critical requirement of seller approval, which is fair as the sellers are going to be handling the deal to the end, with the exercise of the option and the execution of the Purchase & Sale of the property.
The main benefits for the Buyer are the ability to anticipate possession of a home while setting up for the purchase, avoiding an immediate need for financing, and, for the seller, likely tax benefits, higher sales price, and further income in the form of regular cash flow. It also helps the house sell more quickly than conventionally, as it's a rarer opportunity for a buyer. The buyers, therefore, often reduce or waive contingencies entirely, are willing to pay more than in a conventional transaction as it's less appealing and, in the long term, more expensive for them.
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