There are various rights to the tenant in a rent-to-own agreement that may depend on the state where the person lives, the federal Acts and laws that determine who has more responsibility and the options in purchasing the property. The benefits for either tenant or landlord deal with the financial and the land or building itself in usual agreements.
Most rent-to-own agreements have two components. The contract may stipulate a standard lease agreement between the landlord and tenant along with an option to purchase the property. These two agreements are often in a single document, but the parties may choose to fill out separate paperwork for the details. The requirements that the tenant needs to follow are generally in the lease agreement to include any limitations of what he or she may engage in or perform while on the property until a certain amount in payments transfers to the landlord. The purchase agreement may provide additional conditions such as who is responsible for what utilities and maintenance until the property is under the complete control of the tenant.
The Lease Agreement Explained
In the standard agreement where the tenant is leasing the property, the full title usually remains with the owner until the person leasing progresses to the point he or she will start to purchase the house. This makes the relationship a tenancy until the purchasable transaction starts. During this phase, the tenant will have various restrictions such as pets, changes to the inside and outside of the building and modifications or alterations of the land. The tenant may need to refrain from adding more buildings or placing certain plants on the property. Rent is necessary until the sale completes between the two parties.
Other common clauses may depend on the state laws regarding a landlord-tenant agreement.
Purchase Options Explained
When a person enters into a rent-to-own agreement with the landlord, he or she may use such an option at any time as based on the contract stipulations. This permits the individual to eventually buy the apartment, house or condo from the current owner. There is a time limit in many of these situations that may require a fee or have an option for no additional expenses. Some tenants will pay more during the rental phase to add to the purchase of the unit. Any lack of taking advantage of the purchase option will lead to a situation where the tenant will not receive any money back other than a possible deposit.
The purchase option is important for both landlord and tenant, and the event may require additional terms and conditions covered in the purchase documentation. This could include the purchase price, any changes to rent once the purchase option is open and taken by the tenant and obligations of both parties. The conditions of the contract often stipulate which person must pay for utilities or who will maintain the property with appliances and other items. The set-aside payments for purchase may also have additional clauses within the agreement. It is often essential to hire a lawyer to sort out the paperwork.
Tenant Necessary Obligations
For the rent-to-own tenants, each usually has additional obligations such as repairs, maintenance and upgrades that the landlord would usually make during or prior to the move in of the person or family. The usual lease rules still apply until the tenant decides to take the ownership option and add more money to lease arrangements for payment on the house or unit. This affects pets, additional family living there, criminal activities and any other stipulations the lease forbids. If the tenant that wants to eventually own the property violates the guidelines in the lease, he or she may void the ownership options available.
Other obligations that the tenant may have during the rent-to-own process involves the necessary preparation of buying a house or unit. These include an appraisal of the property, a survey of the land and inspection of the building. Knowing the actual appraisal price will help the tenant if he or she wants to sell it later or to understand if the landlord is selling it at an appropriate price based on the condition. The inspection will help the person discover any defects or problems.
Rent-to-Own Agreements and the Lawyer
When signing a contract such as a rent-to-own agreement, and when purchasing a house or building, a real estate lawyer becomes important. Hiring one could prevent possible economic injury and help the tenant avoid various complications that could arise.