Lease Option - Option Fee

[Michael Baradell]

Hey BP!! 

I am in the early stages of setting up a lease option on a property that I own. Here is my question In regards to the option fee: I will be using an escrow company to set up and manage the lease option for the duration of the term.  The option fee will be made payable to the escrow company to protect the buyer. Question: Will I receive the option fee when the buyer/tenant moves in? Or, will the option fee be held in escrow until the term is complete? Second question: My understanding is that the option fee will go towards the down payment instead of taking it off of the purchase price. Is one better than the other? 

[Priscilla Z.]

To answer your first question our option fees are non-refundable therefore we get it when the tenant/buyer moves in...

As far as your second question, our option fee gets applied towards the down payment when the option is exercised, and the down payment will get applied towards the purchase price when they go to close, so it all goes together anyway.