RentToOwn-HouseFinder.com

How does the Lease with the Option to Buy thing work?

I don't know anything about this, but someone just approached me today. Can you explain how it works (as opposed to renting)? Should I get a lawyer to draw up the contract or read it over? Any info you have will be very helpful. I don't know anything about it and the guy is coming by tomorrow night to see the place. Thank you

Public Comments

1. Usually a down payment is made, depending on how much you want cash in your pocket and if you think the other person really wants to buy, kind of a larger than normal security deposit in case later the deal is terminated. Then they will make monthly payments and it is to be applied to the pre-agreed amount. You decide on how much to sell the house for, minus the down payment, which should be non-refundable if the person pulls out on the deal at a later date. Then that amount minus the monthly rent to own payment. Most of the time you can find a title company in town which will have some kind of standard contract that both parties can sign. You need to decide on an interest rate if you are financing, that what usually happens on a rent to own. If you need more explanation, maybe a call to a Realtor can help. Lots of offices open on Saturday. If you're not sure don't agree on anything, take your time and do moe research. You can tell him it might be something you can do. Are you the one to do the rent to own, or him.
2. A Lease with an Option to Buy is a tricky thing. It can, however, be advantageous to both the seller and the purchaser. Make sure you understand it completely. It can be structured in many different ways and frankly, you should consult an attorney who specializes in real estate law in your area before entering into any Lease with Option to Buy. For example, in a traditional LWOTB, the purchaser pays a non-refundable option fee up front. This is normally not applied to the down payment, but it can be. Then either part or all of the monthly payments is applied to the purchase price - if you are still paying a mortgage on the property, can you afford to do this? You can agree on a selling price now or at a later date. A LWOTB is a finite contract - there is a date by which the buyer must be ready to purchase. Be very careful about someone who shows up to look at your house with a Lease with Option to Buy Contract in hand. Do not sign anything - have your attorney look it over first or have your attorney draw it up for you.