Rent-to-Own 101: How Does the Contracts Work in Clarksville TN / Oak Grove KY?

Rent-to-Own 101: How Does the Contracts Work in Clarksville TN / Oak Grove KY?

Rent-to-Own 101: How Does the Contracts Work in Clarksville TN / Oak Grove KY?

You’ve probably heard the term “rent-to-own” used with consumer products like furniture or cars, but it can apply to homes, too. If you’re a renter and have your sights set on buying a house down the road, a rent-to-own agreement is one path to get there.
This process starts with a contract, a (1.) rental agreement and (2.) an option to purchase.

Let us take a look on what you need to know about both:

Lease Agreement:

As being defined by Wikipedia, A lease agreement is a contractual arrangement calling for the lessee (tenant) to pay the lessor (owner) for use of a home.
In this case, your lease agreement will specify your rent (more on this in a minute) and the term — in most cases, it will be two or three years.
There will be several standard terms and conditions you’ll need to meet: For instance, paying on time, building and code violations, occupancy limits, and general conduct requirements. Violate these terms, and just like any tenant, you can be kicked out. However, this time, you also risk losing any money you’ve paid toward the home’s eventual purchase.
One big thing that may be different in this lease agreement: You, the tenant, may be responsible for maintenance costs and general upkeep of the home instead of the landlord. The logic here is that you’ll be motivated to keep the house in top shape if it will be yours in a few years.

The Option Agreement:

Wikipedia explains Lease option (more formally Lease With the Option to Purchase) as a type of contract used in both residential and commercial real estate. In a lease-option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property.
In this case, the lease option gives you dibs to purchase the home you’re renting, typically valid for a term equal to the lease term set forth in your rental agreement. So if the lease agreement specified a three-year lease term, the lease option will usually give you three years to buy the house without worrying about anyone else swooping in and snatching it out from under you.
To maintain first dibs, you’ll pay an option fee. The amount can vary widely: According to Zillow, anywhere from 2% to 7.5% of the home’s purchase price is typical. This option fee is then credited toward the home’s purchase at the end of your term. However, if you decide not to buy, you’ll lose the money.
Make sure you’re signing a lease option, and not a lease purchase. Sometimes these terms are used interchangeably, but a lease option gives you just that — the option to buy the home. A lease purchase obligates you to buy the home and means the seller can take legal action if you try to back out.

Interested in Rent to OWN Homes? Fill out the short form below to be notified as soon as we have new homes!

.fade { opacity: 0.3; }