Rent To Own | How it Works
The Rent to Own transaction begins with a buyer and seller willing to engage in a Rent to Own Lease Option transaction. When they decide to go ahead, they sign the Lease Option Agreement, an11-page document consisting of an Option Agreement, a Lease and a Purchase Agreement which we can either prepare for you or you can use the form we use. The home's purchase price is specified in the agreement, or it is set by appraisal later when the purchase option is exercised. It is up to you. The option term too can fit your needs. Do you want to the purchase option to begin immediately and end one or two years later, or would you prefer that the option not be exercised until a date further in the future? You can choose the timing right for both parties.
The Lease Option Deposit
When the Agreement is signed, the Prospective Buyer puts up a refundable deposit and begins a 20 day contingency period to investigate the property. If the Buyer decides against the lease option, the deposit is returned and the agreement becomes void. If the Buyer decides to go ahead, the rest of the option deposit is paid, and all option deposits become non-refundable, to be credited to the purchase price if the purchase option is exercised. The lease now commences.
Exercising the Option to Purchase
During the option term, the Prospective Buyer may exercise the purchase option or not. If exercised, the pre-signed Purchase Agreement takes effect. If the purchase price is to be determined by appraisal later, the appraisal is performed at that time. The agreement specifies the method for performance of the appraisal. The loan is the only contingency to the purchase. If the Prospective Buyer is not able to obtain the loan or does not agree with the Seller financing, if offered, he may cancel the agreement and forfeit all deposits because they are non-refundable. Other than the loan contingency, the Prospective Buyer is committed to purchasing the property once the Purchase Option is exercised. If the Option is not exercised, all option deposits are retained by the Owner as consideration for granting the option, the Lease Option Rent to Buy Agreement becomes void and the lease terminates. If you find this is the answer for you, go to our Fees Page if you want us to facilitate the transaction for you or our Do It Yourself Page if you want to do it yourself using our forms.
You Can Do it Yourself
Remember how Marilyn mentored you through the equity share? She made something bordering on complex almost simple. Well, Marilyn has done it again with the Rent to Own Lease Option. Her Rent to Own Coach walks you through every step of the transaction while the Rent to Own Lease Option Agreement and the Additional Documents form its legal framework. With the Rent to Own Library, available under Rent to Own Products, you can set up your Rent to Own transaction yourself.