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Commercial Lease-to-Own Agreements: Lease Purchase v. Lease Option; Key Terms; Buyer and Seller Risks and Benefits

A live 90-minute premium CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Monday, October 28, 2024 (in 12 days)

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

(Alert: Event date has changed from 8/29/2024!)

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This CLE webinar will discuss key terms and drafting considerations for lease-to-own agreements and how these differ from traditional commercial leases. The panel will address under what circumstances these agreements should be considered and what risks and benefits they have for owners and tenant/buyers.

Description

In a volatile commercial real estate market, where purchasing commercial real estate may be financially out of reach for many businesses, commercial lease-to-own transactions provide an alternative with certain benefits and risks for owners and tenant/buyers.

Two common types of commercial lease-to-own agreements are lease purchase and lease option agreements. A lease purchase agreement is used when the tenant agrees to rent the property for an agreed-upon period and to purchase the property by a certain time. Whereas the lease option agreement gives the tenant the right to purchase the property during a defined period of the lease although they are not obligated to do so.

Lease-to-own agreements have unique considerations for owners and tenant/buyers such as the terms under which the tenant/buyer has the right to purchase the property including when the purchase must be made (or in the case of an option, when the option must be exercised); how much of the rent will be credited toward the eventual purchase price; and who is responsible for maintenance and repairs (which may differ from a traditional lease in that the tenant/buyer has an interest in the ongoing condition of the building they will be purchasing and, therefore, may take on more responsibility for maintenance/improvements). How certain terms are defined may also have tax implications for the parties.

Listen as our expert panel discusses the benefits and risks of lease-to-own agreements for owners and tenant/buyers and addresses key terms and drafting considerations.

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Outline

  1. Introduction
    1. What is a commercial lease-to-own agreement?
    2. Pre-drafting considerations
  2. Lease purchase vs. lease option agreements
    1. Key differences
    2. Key terms and how they differ from traditional commercial lease terms
    3. Owner benefits and risks
    4. Tenant/buyer benefits and risks
    5. Possible tax implications
    6. State law considerations
  3. Practitioner takeaways

Benefits

The panel will review these and other key considerations:

  • Under what circumstances may counsel steer their clients toward a lease-to-own transaction?
  • What benefits and risks does a lease-to-own transaction have for owners? For tenant/buyers?
  • What key terms are unique to lease-to-own agreements and how do these differ from traditional commercial leases?

Faculty

Kelly, John
John G. Kelly
Shareholder
Bean Kinney & Korman

Mr. Kelly focuses his practice on general corporate law and real property law, including commercial real estate...  |  Read More

Additional faculty
to be announced.
Attend on October 28

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You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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