National Property Management Group Property Managers


Lease to Own Guide

Options to purchase, lease options and rental lease purchase agreements are three different rent to own financing documents. The variances are state-specific and not all states have identical laws. Before entering into an agreement with a seller, buyers should obtain the advice of a real estate lawyer. The information below is a rent to own overview and is not meant to be construed as legal advice.

Learn more about Rent to Own Rental Properties:

Basics of an Option to Purchase
Basics of Rental Lease Options
Basics of Rental Lease Purchase Agreements
Doing a Rental Lease Option / Rental Lease Purchase
Lease Purchase Benefits for Sellers and Buyers

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302

Basics of a Rent to Own Option to Purchase

• Buyer pays the seller option money for the right to later purchase the property. This option money may be substantial or as little as $1.
• Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most rent to own buyers want to lock in the future purchase price upon inception of the option.
• The term of the rent to own option agreement is negotiable, but the common length is generally from one year to three years.
• Rent to own option money is rarely refundable.
• Nobody else can buy the property during the option period.
• The buyer can sell the option to somebody else.
• If the buyer does not exercise the option and purchase the property at the end of the option, the option expires.
• The rent to own buyer is not obligated to buy the property.

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302

Basics of a Rental Lease Option

• Buyer pays the seller option money for the right to later purchase the property. The option money may be substantial.
• Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the rental lease option.
• During the term of the rental lease option, the buyer agrees to lease the property from the seller for a predetermined rental amount.
• The term of the rental lease option agreement is negotiable, but the common length is generally from one year to three years.
• The rental lease option money generally does not apply toward the down payment.
• A portion of the monthly rental payment typically applies toward the purchase price.
• Option money is rarely refundable.
• Nobody else can buy the property during the rental lease option period.
• The buyer generally cannot assign the rental lease option without seller approval.
• If the buyer does not exercise the rental lease option and purchase the property at the end of the rental lease option, the option expires.
• The buyer is not obligated to buy the property.

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302

Basics of a Rent to Own Purchase

• Rent to own buyer pays the seller option money for the right to later purchase the property. This option money may be substantial.
• Buyer and seller agree on a purchase price, often at or a bit higher than market value.
• During the term of the option, the buyer agrees to lease the property from the seller for a predetermined rental amount.
• The term of the rental lease purchase agreement is negotiable, but the common length is generally from one year to three years, at which time the buyer applies for bank financing and pays the seller in full.
• The option money generally does not apply toward the down payment.
• A portion of the monthly rental lease payment typically applies toward the purchase price.
• Option money is nonrefundable.
• Nobody else can buy the property unless the buyer defaults.
• The buyer typically cannot assign the rental lease purchase agreement without seller approval.
• Buyers are often responsible for maintaining the property and paying all expenses associated with its upkeep, including taxes and insurance.
• The buyer is obligated to buy the property.

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302

Doing a Rent to Own Lease Option / Rent to Own Lease Purchase

Hire a real estate lawyer to draw the documents and explain your rights, including those of possession and default consequences. The property might be encumbered by underlying loans that contain alienation clauses, giving the lender the right to accelerate the loans upon sale.

Sometimes sellers give the option money to their real estate agent as full payment of commission. Agents are not always involved in the exercise of rent to own lease options or fulfillment of rent to own lease purchase agreements and, even if you have retained real estate agent representation, you still need a real estate lawyer. Agents are not lawyers and cannot give legal advice.

In the event of a rental lease purchase, obtain all the disclosures and do your due diligence just like you would on a regular sale. This means:

• Get a home inspection
• Examine the title policy
• Obtain an appraisal
• Read seller disclosures
• Consider obtaining pest inspections, a roof certification, home warranty plan and hiring other qualified inspectors

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302

Rent to Own Lease Purchase Benefits for Sellers and Buyers

Rental lease purchase agreements are commonly offered by sellers that own difficult-to-sell properties. Think about it, if the property was easy to sell, the seller would sell it to a conventional buyer who would pay the seller cash. However, there are rental lease purchase benefits for both buyers and sellers:
• Sellers generally get market value at today’s prices and relief from paying a mortgage on a vacant property.
• Although the lease payments may exceed market rent, the buyer is building a down payment and banking that the property will appreciate beyond the agreed upon purchase price.
• Buyers generally make a small down payment, with little or no qualifying, making a rental lease purchase an attractive way to ease into the benefits of home ownership.
• Buyers also receive a forced savings plan since part of the lease payment is credited toward the purchase price at the end of the lease option agreement.
• If the buyer defaults, sellers do not refund any portion of the lease payments nor the option money and may retain the right to sue for specific performance.

Contact Us for any questions regarding Rent to Own purchase agreements today! Call (913) 766-2302