I have an LLC that purchases properties using lease options and have been doing that for years.  One of them is coming up on a decade.  The use of lease purchases or lease options his highly regulated in North Carolina. Here is a link to the law on lease purchases in North Carolina.  It is not hard to draft an agreement that complies with the law because the statute gives you a checklist of what is required.   http://www.ncga.state.nc.us/EnactedLegislation/Statutes/PDF/ByChapter/Chapter_47G.pdf.   In North Carolina, the real estate commission has said that Realtors cannot draft lease option and lease purchase agreements, you need to hire a lawyer to avoid engaging in the unauthorized practice of law.


The law in North Carolina came into effect to cure the problem where landlords would take a large option payment from a tenant, sign a lease purchase agreement, then not pay the mortgage while they were collecting the rent.  I had one of  these where the tenant was a heavily armed bounty hunter.  The lender foreclosed and the lender called me after their regular Realtor for that area called them in tears after the bounty hunter explained to her that if she was involved in throwing him out of the house, he would spend the rest of his life hunting her down.  To say he was upset is an understatement and rightfully so because he had paid the landlord thousands in an option payment and pre-paid his rent with additional thousands.  I took the assignment and it all worked out.  He is not hunting me down, other than he wants me to help him buy a house in the future.  As a result of situations like this, the NC law gives the tenant/buyer the right to terminate the agreement and get a refund of the option payment. If you are the one buying the property with the lease/purchase, the termination provision is not a problem.  If you or your client are selling to a third party, there may be an issue caused by the refund provision for the option money  


When you buy a property with a lease option, one thing to remember is the title is still in the sellers' names.  If the sellers get a judgment against them, it can become a lien on the property which could affect the tenant/buyer's ability to close the sale.  Also, you need to set up a system where the tenant/buyer is sure that the landlord/seller pays the mortgage.  I trust my seller's completely (one is my son, the other is the son of a friend), so I do not have to worry about this.  On my son's property, I pay the mortgages directly and the lender has no heartburn about the fact that the check has a different Burrell's name on it.  Other lenders might get weird on you and try to stretch the "due on sale" clause to say that there is enough of a transfer of an interest in the property to call it a default under the terms of the deed of trust.  However, that is extremely unlikely because the lender is getting paid and there is not enough of a transfer of an interest in the property.

One third of all  loan applications get turned down.  Many of the applicants are good borrowers, but the regulations on loans are getting too strict.  If you have a situation like this, a lease purchase or a lease option might be the right tool to solve the problem.