Can you lease to own a property to someone else if you yourself are leasing to own the property?

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Can you lease to own a property to someone else if you yourself are leasing to own the property?

I am ‘leasing to own’ a
commercial property from
someone whom I just found out
does not actually own the
property. We have a contract
that states SHE is the seller.
Is this even possible?

Asked on December 1, 2017 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

No, someone who does not herself own the property cannot enter into a  lease-to-own arrangement because she does not have the legal right or authority to transfer ownership of something she does not own. This contract, as you describe it, would be void for impossibility (it cannot be fulfilled), illegality (it is illegal to sell another's property), and/or fraud (lying about she can do to get you do sign). You can sue her to recover some of the money you have paid: if she is herself a tenant (currently leasing) the property, she *could* sublet it--just not enter into an agreement to sell it. Therefore, you occupying it (subletting) from her is possible and legal--it is the part about leasing *to own* that is imposisble and illegal. Therefore, since you were occupying the space and did occupy it, getting the benefit of occupying it, she could get from the fair market rental (subleasing) value for the time you actually have been there--but cannot get any amounts over that fair market rental value representing the premium or additional amount paid to own or buy the property, since she cannot sell it to you. So you can get some of the money back, that portion representing the additional amount over the fair rental value being paid towards ownership.
Going forward, as long as she is herself a legal tenant, she can continue to sublease or rent to you--but again, cannot enter into an agreement to sell what she does not have.


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