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Rent-To-Own Agreement

Posted by Albert Cruz on May 3, 2018 at 9:15 AM

Components of the Rent-To-Own Agreement

A rent-to-own agreement is made up of two agreements: a standard lease agreement, and an option to purchase:

 

The Lease or Rental Agreement

In a rent-to-own agreement, the title to the house remains with the landlord until the tenant exercises his or her option and purchases the property. In other words, the starting point of this kind of an arrangement is a tenancy, not a house purchase transaction.

 

The Option to Purchase

An option to purchase grants the tenant an option (right) to buy the rental property within a specified period of time in exchange for a fee (option fee), that is usually paid up front, and/or in the form of a higher-than-market rent (some of which is applied to the house purchase). A tenant who does not exercise the option to purchase is not entitled to a refund of the option fee or any refund in rent.

 

Because so much is at stake for both landlord and tenant, it is crucial that the option to purchase covers all important terms and conditions such as the duration of the option period and the purchase price of the house.

 

Please call for more details about these key issues.

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