Full question:
I sold a house, via owner financing 6 years ago with the stipulations this person, a good friend (and still is), would obtain permanent financing within 2 years. My friend could not obtain permanent financing, so he has been making payments to me for the past 6 years. For the most part this has been a good arrangement. Just to make sure we had some kind of an agreement past the 2 year period, and since this person is not qualified to obtain a permanent mortgage, we signed a lease agreement, in effect so they would continue to remain in the house and make payments. If my friend wanted his $30,000 back, would I have to return the money since it was never anything more than a down payment in the first place? It was not a deposit and the original agreement stated the money would be forfeited if he could not obtain the funds within the 2 year period (although he has the right to sell the house at anytime to get his equity back if he needed to). If he were to break friendship and demand his money, what obligation am I under to return the funds?
- Category: Contracts
- Date:
- State: National
Answer:
Generally, the contract terms will govern the refund policy on payments made under a lease with a purchase option. If the contract stated that payments made would not be refundable, a court will typically honor the contract terms as long as they were knowingly and
freely entered into. A lease-purchase agreement usually provides that the buyer loses the option money if he/she doesn't go through with the purchase.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
