What is Rent to Own Contract?
A contract signed between the owner of a property and renter who is planning to buy that property for some specific time is known as rent to own a contract. Where paying the whole amount for purchasing any property or home is not possible, this rent to own agreement works best. The tenant must pay an amount specified by the owner, this payment is often termed as down payment. In addition, to the down payment, a tenant is also supposed to pay an amount per month as demanded by the landlord.
To take advice from any legal person is best and most appreciated, but one should know exactly what should be included in the contract and what should be excluded. The must requirements of this type of contract include the requirements that are discussed below.
The Agreement Enclose:
The contract must contain a few necessary details and provisions. As every other contract, this too should discuss the possible terms and conditions discussed between both parties. But the details of the lessee and the lessor must be given proper care and should be mentioned accurately. Other must detail include, the lease term and information regarding the lease agreement like rentals and down payments. Particulars of the purchase price, option money, rent, maintenance amount and other numeric must be mentioned correctly in the contract. This document must also contain the other required provisions and points which were discussed and agreed upon by both the parties before the contract was made. These provisions must be read thoroughly and then must be signed by both the parties and a date must be written down on which the contract was signed.
Do Not Forget:
The contract must identify who is the owner of the property and to whom the property is being rented to. To be on a safe side a date on which the renter will move into the property is to be specified. In the contract amount deposited by the renter must also be specified. The amount deposited usually ranges between 1-2% of the actual price of the property. The purchase price of the property is also written on the contract. It is mandatory that both the parties must agree on the particular price. The contract must also include the amount of rent paid and how it is to be paid. Either the owner collects the amount himself, or it is to be deposited by means of Cheque. In the case of any delay in the rent what actions could be taken and what are the issues that could arise. Clearly, specify in the contract that who is authorized to maintain the property. This point states the responsibility to repair, decorate and paying off the utility bills.
A sound contract comprises of all the points specified above yet, these can be altered according to the requirements.
A sample of this contract has been provided by http://www.law.missouri.edu/freyermuth/ret/fall2016/. It is provided here to DOWNLOAD for better understanding.
Preview & Details of Template
Rent to Own Contract Template
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