Lease Option or is it just a Rental

I haven’t run into this before and I’ll try to make it clear. Please note that rental deposits in MI can’t exceed 1.5 times the rent.
The home in question I can get for 75% of value. Owner sold it on a Lease Option. One time friend of the owner and owner is evicting due to non-payment. Tenant/Buyer put down 5K Option consideration and never signed the agreement. The rent which they don’t pay is $500/mth(way under what it should be). T/B has taken legal steps to stay in home but Judge says they have to be out on July 17th. Owner says T/B won’t be refunded.
Here’s my take on it. Since T/B never signed any agreements the Judge might call it a regular rental. Now the owner might have to return $4250.
5K - 1.5 rent deposit.
Is this how you see it??? Herbster

If there is nothing in writing, I bet there is no receipt for the option consideration either. Hard for the court to rule on the disposition of the option consideration without supporting documentation if both parties don’t agree on the facts and circumstances.

I agree with Dave, except if the T/B shows a canceled check, the owner is SOL, especially if he said the T/B didn’t give him the option consideration. In that case, the judge will simply give the T/B whatever he wants. The judge can also rule based on the way the litigants present themselves. If the judge doesn’t like or believe the owner, he can side with the tenant.


I am thinking along a slightly different line. The scenario presented by herbster is that the seller acknowledges receipt a payment. The fact that some payment presented by the buyer and accepted by the seller is not in dispute.

Suppose the seller claims that the check received from the tenant buyer was non-refundable option consideration, with the amount and terms of the option agreement mutually verbally agreed at the time the option consideration was received.

Suppose the buyer claims that the check was security deposit and prepaid rent under a verbal lease agreement.

With nothing in writing to docoment the lease option agreement, I don’t quite see how the court can objectively side with the seller and rule that the payment given is a non-refundable option consideration and give the seller a judgment for the tenant’s unpaid rent.

On the other hand, if both parties agree that there is a rental agreement, maybe the court will treat the payment as security deposit and prepaid rent and allocate distribution of the payment accordingly.

Your thoughts?

The judge will rule what he thinks is fair given the facts presented to him. The law is irrelevant because he will interpret it to meet the outcome he wants. I don’t know MI law, but the seller is SOL if the state forbids prepaid rent and he collected too much. Many do. Worst case is that he rules it a sale and gives the T/B some kind of equity. He could also refer the case to the consume protection division of the AG. Courts are a crap shoot and you never know what will happen.

Yup, courts can prove to be no more than a crap shoot in some cases. I have seen this myself.

Thanks all, the problem has been taken care of. Herbster

Hey I think Dave is correct in his opinion.


Does not matter. As BLL said, it is the court’s opinion that matters, and the court is going to disagree with at least one of the parties involved.


Tell us how the situation was resolved.

Dave, The crappy buyers didn’t sign anything. They paid cash down and no receipt was given or asked for. The sellers were giving a hell of a deal. $500/mth when it could have easily been $800. Buyers were never on time and haven’t paid in months. They should be out in a week and then the deal is mine, I hope. Herbster

This should be a standard eviction as long as the sellers keep quiet. Good luck, Herbster.

Let me repeat a story told that describes how uncertain courts can be.

A police office was accused of brutality and the defense argued he didn’t do the acts the victim alleged. The jury ruled in favor of the defendant. The defense attorney spoke with a juror after the trial and was told the jury believed the officer to be guilty, but they thought the victim deserved what happened because she was a b$#$#. Court is crap shoot. The only certainty is that a judge will twist the law in whatever way he can to reach the outcome he wants.