Rent to own and lease-purchase agreements are cropping up in the Greater Phoenix real estate world these days. They’re a natural result of the continuing tight credit market.
Lease-purchase and rent to own are essentially the same things. A lease with a purchase option is almost the same, just with more complicated legalese thrown in there.
We don’t typically assist folks with leases that turn into purchases, no matter what the terms. We feel strongly that you really should hire a lawyer if you’re going to do anything that involves renting a house now and buying it in the future.
Here’s some brief thoughts on the situation; I took these from a quick email I sent out earlier today to some friends of ours.
Rent to owns (lease-purchase and lease-purchase options) are usually a little tricky --
- does tenant pay a little extra each month towards down payment?
- or does the tenant pay a lump sum amount now? (usually several thousand dollars!)
- if so, who's bank account “gets” the deposit(s)? does that money earn interest? for whom?
- under what circumstances are extra payments refundable?
- what happens to that extra deposits/payments if the rent is late a day or two? if it’s late several weeks?
- do you value the purchase price of the home now or in several years when the purchase happens?
- do you get an appraiser? who pays for the appraiser?
- what if the appraisal comes in lower than the agreed-on purchase price?
- what if either side changes their mind between now and the purchase?
As you can see, there are a lot of questions. We recommend you hire a real estate attorney to help you figure out the answers. Call or email us, we know several excellent Greater Phoenix attorneys!