What happens when the contract ends will depend in part on the type of agreement you have signed. If you have a lease option agreement and want to buy the property, you`ll likely need to get a mortgage (or other financing) to pay the seller in full. The lease agreement with an option to purchase gives a tenant the right to acquire the property under the conditions set out in the contract. The form must be drafted in accordance with all lease laws, in addition to the rules of the National Real Estate Commission, which generally require that certain disclosure forms be attached. Leases should determine when and how the purchase price of the home is determined. In some cases, you and the seller grant a purchase price when signing the contract, often at a price higher than the current market value. In other situations, the price is set at the expiry of the lease on the basis of the current market value of the property at that time. Many buyers prefer to „secure“ the purchase price, especially in markets where real estate prices are rising. Remember that this contract is a standard rental agreement with the possibility of buying the property for a lifetime. The buyer is not bound by the purchase of the property. However, if the buyer chooses to buy the property, the seller is obliged to sell according to the terms of the contract. As a Rent-to-Own agreement is a kind of combination between a rental agreement and a real estate purchase agreement, there are many details to include. Make sure that all the details below are included in the drafting of your agreement.
You pay the rent for the duration of the rental. The question is whether a portion of each payment will be applied to the eventual purchase price. For example, if you pay $1,200 in rent per month for three years and 25% of it is charged to the purchase, you will receive a rental credit of $10,800 ($1,200 x 0.25 = $300; $300 x 36 months = $10,800). As a general rule, the rent is slightly higher than the current rate for the territory to compensate for the rental credit you receive. But make sure you know what you`ll receive for paying that premium. To have the opportunity to purchase without obligation to purchase, it must be a leasing option agreement. Since it can be difficult to decipher lawyers, it`s always a good idea to check the contract with a qualified real estate lawyer before signing something so you know your rights and know exactly what you`re committing to. Once this agreement has been duly signed, each party is expected to conquer the conditions imposed on it.
Some of these items require unique information for participants and the property to be made available to them so that they can be properly applied. Look for the first item, „1st rent,“ and then write down the total amount of money the landlord expects the tenant to pay during the year on the first empty line….