Most adults who move out of their parent's homes are familiar with a basic rental lease. However, the rent-to-own lease is another option for those who want to own a home but lack the means or credit score to do so. A rent-to-own agreement gives you the option to buy a house that you are renting before the lease expires. This type of agreement comprises two parts: a standard lease contract and an option to buy.
This is a more complicated process than simply showing up at a rental office and signing a common lease. However, that is something most people do after a cursory review of the document in question. With the rent-to-own agreement, you will want to hire a real estate attorney to go over the details of the contract and make sure you know upfront what you are getting into.
This is a necessary step to prevent misunderstandings. Without a knowledgeable real estate attorney, signing a document can lead to unpleasant surprises. You don’t want to end up in a situation that costs you extra money or traps you in a place you don’t want to be and can’t afford to keep.
Questions your real estate attorney seeks to answer:
Is a percentage of the rent you pay through the duration of the lease applied to the overall purchase price? If so, how much of a percentage. The agreement should clearly state the cost of the home, and what the deadline to exercise the option to purchase is.
Who is responsible for maintenance and repairs while you rent? If those obligations fall to you, they need to be clearly defined in the rent-to-own documents. Having your lawyer explain this to you is valuable, because sometimes failing to comply can void the contract altogether or incur unexpected penalties.
What is the agreed upon purchase price and will it be subject to increase with changes in the housing market? Most buyers enter into rent-to-own agreements with the understanding that the initial contracted price will remain not fluctuate during the term of the lease. You don’t want to overlook such a clause and then be informed your home costs thousands more than you had budgeted for.
Depending on each buyer’s financial situation, your real estate attorney will need to tweak different facets of the rent-to-own agreement so that the overall contract works for you. The end goal is to help you become a homeowner of a place you can afford.