Did you know that it is possible to have a that allows the tenant to have an option to purchase the property from the landlord in a specified time? Here is an overview of how this agreement works and template for a lease to own that will help you understand the main points of the contract.
Most of us are used to being signatories to documents drafted when a landlord leases out his house to a tenant. These agreements are important to define the rent and other obligations that both the landlord and the tenant are under. But did you know there is a type of lease agreement that allows to make use of the lease option to buy home. This agreement is known as the lease to own contract and is a popular way of buying and selling property. A proper and well drafted rent to own contract ensures that many legal issues that may crop up are bypassed.
A lease with an option to buy in simple terms allows the tenant to buy the property from the landlord in a specific period at a specified price. This agreement is combined with a lease agreement and every month the buyer pays a premium towards the purchase price. The buyer also pays an option fee when the agreement is signed towards the purchase price. These agreements have to be drafted properly which is why it is important to take proper legal advice and consult a real estate lawyer. These contracts were extremely popular in the ’70s and the ’80s when alienation clauses in mortgage agreements were huge hassles. Today these forms are definite financing documents that have state-specific laws governing it.
It is important that you get an attorney to draft this contract for your purposes. Alongside, you can also take a look at a template that will give you the format.
|The Lease to Purchase Agreement made herein is signed between the Seller or Landlord name of landlord and the Buyer or Tenant name of tenant on date on which agreement is signed.
The Landlord is the owner of the premises or property located at address of property and the Landlord and the Buyer have together decided to execute a lease agreement for the property which is aforementioned.
In consideration of certain obligations mentioned herein, agreed upon by both parties, the Landlord grants to the Buyer the option to purchase the aforementioned property. The conditions for the same are agreed upon herein:
This document is the entire agreement understood and signed by both the parties relating to the subject matter and supersedes any previous agreement between the parties. No amendment to this option to purchase agreement will be considered unless in writing signed by the party to be charged.
As a buyer it is important to be cautious as this a kind of agreement that is generally agreed to by owners whose properties are hard to sell. But if the property you are looking at is your dream home and financing is a problem then a lease contract with option to buy may be a brilliant solution. Such a contract may initially seem like a more expensive option because the lease payments tend to be higher than market rent. But the fact of the matter is that with appreciating real estate properties in the long run, a lease to own contract for a property works out in the buyer’s favor, with a property that will appreciate beyond the purchase price.