What Is Rent To Own?
(Renting With An Option To Buy)
Without realizing it many people are already familiar with this type of arrangement. Basically renting a home with an option to buy is very similar to what you do when you lease a car.
When leasing a car, you provide a non-refundable up-front payment (a down payment), you agree to a fixed monthly payment for a specified period of time for the use of the car (2 years, 3 years, etc.) and you have the exclusive right (but not the obligation) to purchase the car for a pre-determined price at the end of the agreement. Since most consumers are already familiar with this arrangement in car leasing, they shouldn’t be too confused when a similar structure is applied to real estate transactions.
There are three major differences between the two arrangements:
In general however, real estate rent-to-own agreements behave much like car lease agreements.
The Eight Main Components Of A Rent-To-Own Agreement:
There are Eight Main Components of a Rent-To-Own agreement and any, or all, of these are subject to negotiation between a tenant/buyer and a landlord/seller.
Depending upon your specific circumstance and depending on whether you are the prospective tenant/buyer or the prospective landlord/seller, you would want to negotiate the definition of each of the above eight items to your advantage.
Click To Read: “How To Buy A House Using A Lease Option”
Learn the advantages, the disadvantages and the pitfalls from a tenant/buyer's perspective.
Click To Read: “How To Sell A House Using A Lease Option”
Learn the advantages, the disadvantages and the pitfalls from a landlord/seller's perspective.
Rent-To Own is NOT a standard method for conveying the ownership of real property. Tenant/buyers and landlord/sellers often turn to this type of arrangement when the standard methods for selling real property do not, or cannot, work. As a result many people try to use Rent-To-Own as a scheme to prey upon someone who is at a disadvantage.
Therefore, before considering a Rent-To-Own arrangement, you must familiarize yourself with the pros, the cons, the risks and the pitfalls. In New York, Rent-To-Own is an unusual real estate arrangement and many attorneys are unfamiliar with how to structure one. Before entering into a Rent-To-Own agreement, seek the advice of an attorney who is familiar with this type of agreement and have that attorney review the documents before signing them.
In general, as long as both parties are seeking to structure a win-win agreement, a Rent-To-Own agreement is a credible method of transferring ownership of real property that is helpful when there are unusual conditions or circumstances. As long as both parties stand to benefit from the arrangement, it can result in a transfer of ownership that, otherwise, might not have been possible.
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