Recently, we have seen a number of “Rent-to-Own Contracts” or “Lease Purchase Agreements” in our office. In these contracts the owner of the property agrees to rent to the tenant for a certain amount of time, giving the tenant the option to purchase the property for a price that was agreed upon at the beginning of the lease. Depending upon the contract, the tenant can either exercise their option to purchase the property during the lease term, or at its conclusion.
This type of contract provides the owner, who may have been unable to sell the property, rental income and a potential buyer. Likewise the tenant has the opportunity to live in a place they see themselves living in long-term, without the immediate financial obligation to purchase.
In rent-to-own contracts, a portion of the rent is often called “Option Price Money.” If the tenant purchases the property, this money will be credited to the purchase price; if the tenant does not purchase the property, the owner keeps the money.
If you are considering entering a rent-to-own situation, an integrated rent-to-own contract is much preferred over piecing together separate rental and sale contracts. This is because an integrated contract clearly spells out the rights and obligations of the parties and provides a smoother transition from the rental phase to the purchase phase.
Please feel free to call our office at (314) 862-2237 to discuss your situation.