What is a Lease Buyout

by zep on September 26, 2011


A lease buyout is a simple procedure that is carried out either by the owner or the lessee depending upon the situation. The option for a buyout is generally written before hand into the original lease application which are mutually agreed to buy both the owner and the tenant. This lease buyout refers to the lessee paying a certain amount of money beforehand to the owner so that he can terminate the lease before it is expired. This formal document is signed by both the parties concerned and requires both to ensure the lease is null and void. The situation for a lease buyout arises when there are problems regarding payment from the lesseeā€™s side and hence an alternative payment plan is created. There are certain guidelines that need to be followed before formulating the lease buyout form and these are as follows:

  • The names of the owner and lessee concerned should be properly mentioned. This is an important document and might be required for legal records and other purposes.
  • The provisions of the buyout should not just be mentioned in the original lease agreement but also in the lease buyout form
  • The reasons for the lease buyout must be specified properly.
  • The insurance details of the tenant also must be mentioned.
  • The mode of payment and the required sum due to the owner must be very clearly stated.
  • The terms and conditions of the lease buyout must be clearly chalked out.
  • The time period within which this transaction is to be completed must also be mentioned. The lease buyout is done generally before the duration of the original lease argument expires.

A lease buyout is an option taken up by commercial landlords and real estate owners. The mode of payment preferred is generally in cash.


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