Within all rent-to-own agreements, the beginning lies with what is called the Lease Purchase Agreement. This is a very popular choice for those interested in living in the home they will someday buy before making a dedicated commitment to purchase the home. Let’s discuss what a Lease Agreement is and why this is an important part of the home purchase to clearly understand prior to embarking on your rent-to-own journey.
Introduction to Lease Purchase Agreements:
The Lease Purchase is a combination of an exclusive right-of-first-refusal for later purchase of the property and what we consider a “traditional rental agreement” like you would see when renting an apartment or a house. What this means is that you will lease the home with the option to purchase it later at a pre-agreed upon price. This means that the resident will pay what’s known as an option fee, as well as a monthly payment which includes rent credit for a set period of time. This contract will also include a locked-in sale price of the home and set of rules unique to your particular arrangement.
Benefits of Lease Purchase Agreements
Lease Purchase Agreements tend to benefit both the buyer and the seller in their flexibility. This allows you to draft an agreement that is customizable and specific to the unique needs of the owner and buyer. You can negotiate most aspects of the agreement to ensure that this is a win win for both of you.
Do you need a Lease Purchase Agreement?
Now that you understand the Lease Purchase Agreement, and what it’s for, your next question may be “do I need a Lease Purchase Agreement?” Whether or not you need a lease Purchase Agreement depends on your unique financial needs. You may wish to speak with a financial assistant who can help you determine whether or not this is a necessity, and what the best course of action is for your situation.
Regardless of the type of agreement you sign, it is best to get some form of agreement in writing rather than relying on a verbal agreement between you and the seller. Even agreements with the best intentions can turn sour over time. Protect yourself by getting everything you negotiated in writing, and having a legal professional review your agreement prior to signing.
There are endless options when you consider purchasing a home, and everyone has a unique financial situation to deal with. Just because yours may be more difficult when considering the path of traditional home ownership, doesn’t mean you need to give up on your dream of owning a home. There are options out there such as renting to own a home.