Very bad idea, Rich. I did this 3x and all went bad.
-Yes the tenants always seems to be sincere about really purchasing--until they find out that they actually have to clean up their credit, save for a deposit, get approved for a mortgage, and still pay their rent on time!
-Yes use 2 dif docs-one lease with the rules of their OCCUPANCY, and one Purchase Option document with the rules of their purchase!
-NO it is NOT a 'non-refundible deposit'--it is not ANY KIND of a DEPOSIT. It is also not a DOWNPAYMENT or a Holding Fee! Get the terminology right or it will come back and bite you. You will collect a non-refundible Option FEE! That is your payment for giving them exclusive option, keeping the house off the market for 1-2 years.
-They are buying an Option on your property--not the property--not yet--just an Option on the property. That options costs something--they pay that FEE to get the option. What they are buying with that $2000 is exclisivity and TIME. Time to improve their credit, time to save for a deposit on a new bank loan. If at the end of 1-2yrs they cannot GET the mortgage because they did not do their saving and credit cleaning--their option expires--and they do not get any money back from the option.
-A MUCH better way to do this is to verbally assure the tenant that you have no intension of selling hte home to anyone but them. They can stay in the property as long as they are paying rent on time. They can take as long as they need to save for the bank loan and clean their credit till they can GET the bank loan--and then you'all will go to the closing table. Let them keep the $2000 toward the bank loan downpayment. What does this do??
For them: it keeps their money in their hand, it gives them more time than a option would do, it frees them of working against a deadline, it secures the home for them as long as they pay the rent and wor toward their goal. For You: it keeps good renters in the property, it minimized damage because they are already thinking of it as theirs, AND if the miracle happens thay they manage to DO all their 'due dilligence" and GET the approved mortgage, you still get to sell the property. No paperwork, no stress for either side. No case to drag thru court, no muddying of the waters of you title to the property.
--140.140.xx.x