Questions & Answers

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.

When purchasing a home, many clients misunderstand or ignore a very critical deadline in their contract – The Loan Contingency Deadline.  If the purchase is conditioned upon the Buyer getting financing, the Loan Contingency Deadline is the date by which the buyer needs to have a firm commitment from their lender that they will receive financing.

When the buyer applies for a loan, the seller wants clarity on whether or not the buyer will actually be able to get a loan and how long this process will take.  The seller sets a deadline by which the buyer needs to have a loan commitment in place, after which the buyer is on the hook to purchase the property, whether or not they can actually obtain the loan.    Many Realtor^® forms we see in our office refer to this deadline as the “Loan Contingency Deadline.”

What confuses many buyers is that getting a document from a lender titled “Pre-Approval,” “Preliminary Commitment,” “Loan Commitment,” or other similar phrase does not mean that the buyer has a firm commitment from the lender.  The lender has not yet unconditionally agreed to fund the loan, and may ultimately decline to if the buyer fails to meet certain conditions.

Buyers can then find themselves in a difficult position if the loan contingency deadline has passed, and their lender has not agreed to fund the loan.

If you have a question about the loan contingency deadline in your contract, or are unsure about what you have received from your lender, please call our office at (314) 862-2237.