The competitive nature of the present generation forces them to search the ways through which they can do more work in less time. Considering rent-to-own contract templates provided by CocoDoc, it is equivalent to "killing two birds with one stone." Both the lease agreement and property sale agreement are covered in one rent-to-own contract agreement.
According to the conditions of this contract template, the tenant should pay more than the average market value of the house. The tenant has to pay this extra payment each month. The tenant can own the house once the lease period is over.
What Is A Rent to Own Contract?
A rent-to-own contract allows the person to get the house on rent and eventually own it after a certain period of time. Rent-to-own contract templates give the lease an option of purchase. The rent to own agreement includes:
- The initial deposits can be small in amount (a part of the down payment).
- The monthly payments according to the decided payment (it includes rent and down payment to some extent).
- There is another option of purchasing the property offered at the end of the agreement.
This contract mixes up the facility of the sale of real estate and the lease agreement. It gives a chance to the person who leases the property to own it. Along with that, it allows the purchase of a property when a certain date of lease of property is passed. Rent-to-own agreement form requires all the basic or necessary information that a property agreement needs to be done.
What is Rent to Own Contract Used For?
Rent-to-own contract template covers a similar aspect simultaneously, which a lease contract and sales of real estate do individually. This contract is used to give benefits to the tenants and the property owners when it comes to purchasing a property. The benefits that a tenant can get through this agreement are:
- A tenant can buy the house at any time in the lease period. He/she can give a full payment to own the house once the lease period starts. Small installments are also allowed to completely own the house.
- The price of purchasing a house would stay the same. The tenant should feel relaxed about the fact that if the price of property increases with time. It would not affect the price decided in the agreement.
- The increasing prices of properties in the areas will not affect the agreement price. The tenant can purchase the house on the decided amount and can sell it at a better price to the other party.
Along with the tenant, the landlord is also getting benefits at the same time. The benefits that a property owner can get through this agreement are:
- Both owner and the tenant will collaborate in the renovation process of the property and even in case of any damage. This will be collaborative work because the landlord is not a full owner when the lease period starts.
- The fixed purchase price of the house is also beneficial for the landlord. In case of the decrease in the property prices of the surrounding areas, the landlord will still get the same amount decided in the agreement.
- It would be good for the property owner if the tenant properly owns the property at the end of the lease period.
Types of Rent to Own Contract
There are two types of rent-to-own contract sample which are extracted from the nature of the agreement. The agreement is a merged form of two contracts. By considering this, both types of rent to own agreement are given below:
- Lease Contract Agreement with an Option of Purchase Property
This type of contract gives the option to the tenant that he can purchase the house at the end of the rental period. That means there is no restriction on the renter. The renter can simply follow the purchase procedure if he wants to purchase the house. Conversely, the user can simply complete the lease period by staying on the lease agreement.
- Lease Contract Agreement with Purchase Agreement
These rent-to-own contracts are less flexible in nature. The renter should think deeply before signing this type of contract. The signatures of the tenant will make it legally obligated to buy the property at the end of the lease period.
How Does Rent to Own Contract Work?
Once the renter and the property owner agree on the terms of the agreement, they can proceed with the process according to the contract. Making a comfortable agreement that can be followed by both parties is in their own power. There is a proper procedure that needs to be followed while working on all agreement templates.
When the contract type confirmation is done, both parties need to agree on the purchase price of the property through negotiation. The renter should also pay the option fee, which is the 1% amount of the purchase price. The contract also includes the renting property details and all the personal details of the buyer.
The renter needs to pay more than the rent of the month, and the extra payment will be considered as the down payment. Many rent-to-own contract templates increase the monthly payments by around 25 to 30 percent. Once the terms are decided by both parties, they need to define their roles. The maintenance roles include the payment of repairs, utilities, and upgrades of the property.
By deciding the terms and conditions of the contract, the contract is ready to be carried out. The renter can live in the property and follow the procedure of the contract according to its type.
The use of rent to own contract template is very beneficial for both the buyer and seller. It consumes the opportunities of two contracts and eases renter and property owner through different ways of earning. However, if you are into understanding the rent-to-own agreement template for buying or selling property, you should take a look at the above-provided details.