Lease/Option vs. Contract for Deed
by William Bronchick
Many investors are generally familiar with the concepts lease option and contract for deed (aka ,installment land contract,). Many investors confuse the two, and this article will help you understand the tax, legal, and practical issues between the two.
Lease Options
First, let’s start with the lease option, which is really two things, a lease and a purchase option. A lease is a contract for the use and possession of land, creating a landlord/tenant (or ,lessor/lessee,) relationship.
A purchase option is a unilateral agreement wherein the optionor (,seller,) agrees to give the optionee (,buyer,) the exclusive right to the purchase the leased premises. The option price is generally set at a fixed...
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