An option to purchase is an agreement where the tenant has the
right to purchase the property at the completion of the lease. The
tenant has a specified period where they may exercise this option
however, they must make additional payments which go towards the
Whilst option to purchase clauses are usually reserved for
commercial properties, there has been an increasing number of
'rent-to-buy' or 'option to purchase' clauses being
included in residential leases. The increasing popularity has been
attributed to tenants seeking more affordable options for owning
Can the courts enforce an option to purchase?
In Mr Le v Tran (2017) NSW ConvR 56-374, the NSW
Supreme Court enforced the right to buy a property if an option to
purchase clause was included in the lease.
A lease between Mr Le (the landlord) and Ms Tran (the tenant)
included an option to purchase clause. The tenant defaulted on her
option to purchase payments and the landlord (Mr Le) sought to
terminate the lease after serving non-payment notices. The tenant
argued that the landlord misled her and that the option to purchase
clause should be terminated and that she shouldn't make
payments for the option to purchase.
The court decided that the tenant was a businesswomen who had
requested the rent-to-buy transaction in the first place, and that
she understood the nature of the agreement she was entering into.
The lease option was found to be enforceable.
What does this mean for you?
This case is a good example of how lease options will be
enforceable if it can be proven that the parties knew what they
were getting into.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Some of the concepts set out in AS11000 may, at some time in the future, be included in the form of a new draft contract.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).