I need help on Sandwich Leasing (Lease with Option to Purchase)

Okay, let’s say for example that I have already met with the homeowner and I got the Lease with Option to purchase form completed and we have a deal… My next step would be to find a tenant/buyer to lease the property out to. Okay, I got that part. But if my tenant/buyer decides to use his option and Buy the house from me, what do I do?

  1. Do I get the money from the tenant/buyer and pay off the Homeowner? If I do that, then don’t I have to sign the deed to the house, then get another deed and sign it over to the tenant/buyer and I get to keep whatever money is left over? And what people will be involved with this transaction? Will there be closing costs? If so, how much? Who do I pay the closing costs to or do I even have to pay for them?

  2. Or do I just take the money from the tenant/buyer and pay off the homeowner and give the deed straight to the tenant/buyer?

Can anyone shed some light on this? These are the only things stopping me from doing sandwich leases. Once I get this information, I can move forward. Thanks in advance.

Chris, the closing will be handled by either an attorney or at a title company. You’re not going to be handling any money or paperwork personally. Contact a local title company and run the scenario by them. They’ll have the answers. It isn’t nearly as problematic as you think.

Thanks for your response! That makes a lot of sense and puts my mind at ease =]

Just one more question though… How much does the title company/lawyer charge for this type of transaction. Is it a set fee or is it a % of the total price?

It should be a set fee. Be a wise consumer and shop around. Prices will vary. But it isn’t only price you should be comparing. It’s finding someone or some company who you are comfortable with and who shares your goals.


look for somebody who knows how to do a “simultaneous closing” or double closings. Explain to them what you are trying to do, there are attorneys and title companies out there that know how to do this.

Good luck,

Make sure you are aware of the laws in your state re lease options and sandwich leases. In Arizona, a sandwich lease is considered a “disguised sale”. In fact, AZ has some pretty strict laws re how much you can charge for an option deposit, etc.