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Rent to Own Contract

RentalAds.com has two different rent to own contract forms.  A free version and a professional, legally binding contract.

Download Legally Binding Rent to Own Contract
These contracts are specifically written for your state and are legally binding. They are written by an attorney and designed specifically for your state laws.

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We also offer a free rent to own contract.  We do not guarantee this contract to be legally binding in your state.

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Rent to Own Contract:

Legally Binding

Free

 

A rent to own contract for a home or any other form of rental property (also referred to as a lease to purchase or lease to own purchase) is one in which a lease is combined with the option to buy the property within a certain amount of time at an already agreed upon price.  Typically, the tenant pays an option fee of 1-5% of the purchase price, which is deducted from the purchase price of the property (similar to a down payment).  The tenant pays monthly due plus a rent premium. If the rent to own option is not exercised within the predetermined length of time allowed, the tenant losses both the option fee and the rent premium.

A rent to own contract has six major items:

  1. Purchase price - determined by the market, but is negotiable.
  2. Monthly rental payments - subject to market conditions, but are also negotiable.
  3. Option period - the amount of time the buyer has to exercise the rent to own option. typically in years.
  4. Rent premium - the monthly amount that is above and beyond the normal monthly payment and is credited to the purchase price.
  5. Option fee - the set amount the tenant pays the seller, typically 1-5%.
  6. Rent credit - this is amount is the same as the rent premium and is credited to the purchase price of the home.

A rent to own example:

Assume a landlord has a house worth $100,000. Assume market conditions in this city puts monthly rent at $500/month. A person who wants to rent to own this home might pay $700/month and receive $200 per month in rent credit. The option fee in this example is $2,500.  Over a 3 year rental period, the tenant would have earned $7,200 in rent credits. Combine the rent credits and the $2,500 option fee and the total accumulated amount earned by the tenant is $9,700.  Therefore, at the end of the option period, the renter would have a balance of $90,300 instead of $100,000.

Benefits of rent to own:

The monetary advantages of rent to own contracts are quite substantial for buyers who don't have a high enough credit score to purchase the home and/or have enough money saved for a down payment.

 

 
 
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