Rent To Own Sample Transaction

Buyer and Seller come together (often as Landlord-Tenant). Buyer wants to buy Seller's home, but needs time to do so. 

The Seller leases his home to the Buyer with a purchase option to be exercised in one year (can be any time frame) for a price to be set now or by appraisal at that time. 

A refundable or non-refundable Option Deposit is given by the Buyer.  There can also be an additional monthly rent amount that goes toward the Option Deposit. 

When the Option Term is reached, the Buyer's purchase option commences if the Purchase Price is set. If the Purchase Price is to be set by Appraisal, an appraisal is ordered and the parties have 10 days to accept the appraisal as the purchase price.

If Buyer exercise the Purchase Option, the Option Deposit is credited to the purchase price. If the Buyer does not purchase, the Option Deposit is returned to Buyer if refundable or retained by Seller if non-refundable. 

The outcome:

Main Street Home 
Lease term: 1/1/24
Purchase Option commences: 1/1/25
Property value now: $960,000
Appraised value at option time: $1,025,000 
Option deposit paid 1/1/24: $20,000
Monthly rent: $3,500
Monthly option deposit (in addition to rent): $500
Option Deposit credited to purchase price: $26,000