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rgonzalez5150, Other/Just Looking in Sacramento, CA

lease 2 own 0ptions

Asked by rgonzalez5150, Sacramento, CA Mon Oct 17, 2011

what r lease 2 own rights

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Among the options:

Lease-option: A unilateral agreement. You have the right to buy, but aren't required to. The seller, on the other hand, is required to sell if you choose to buy. Typically, you pay an up-front option fee (the amount varies, but often is 1%-3% of an agreed-upon purchase price). You lease the property for a period of time (2-5 years, typically; less is very risky), often with a percentage of what you pay in rent credited toward the purchase price. During or at the termination of the lease, you have the right to buy the property at the agreed-upon price.

Lease-purchase: Similar to a lease-option, but a bilateral agreement. You have agreed to buy; the seller has agreed to sell. The remainder of the description, above, is the same--an up-gront option fee, a predetermined purchase price, a specified period for the option, a portion of your payment credited toward the purchase price.

Your rights under either scenario can vary, depending on what you and the seller have agreed to. Typically, the option fee is nonrefundable. Any rent credits--the portion of your rent credited toward the purchase price--are nonrefundable. So if you choose not to buy (under a lease-option) or can't buy (under a lease-purchase), you lose both your option fee and rent credits.

Your rights as a tenant (under the lease portion of a lease-purchase or lease-option) are similar to those of any tenant. And they'll be governed by your local and state laws. However, often a lease-purchase or lease-option requires the tenant to cover a larger share of any repairs or maintenance. You can be evicted if you fail to pay your rent.

The option or purchase agreement can contain some important rights . . . if you write them in. For example, as Tim notes, it can be a real problem if the property doesn't appraise for the agreed-upon purchase price. But you or your lawyer can build some protections in. For instance, if the property doesn't appraise for the agreed-upon purchase price, perhaps the option can be extended for another year. Or the seller agrees to sell the property for the appraisal amount. Or the seller agrees to refund to you your option fee and rent credits. Which solutions is right for you and the seller depends on what you and the seller need.

Another right you want to include: Making sure that the seller is paying his/her mortgage. That can be accomplished in a number of ways. Maybe there's a third party that you send your payment to. Maybe you pay the mortgage directly. Maybe you obtain a document from the seller allowing you to contact his bank to make sure the mortgage payments are being made.

A good real estate lawyer familiar with lease-options and lease-purchases can assist you.

Hope that helps.
1 vote Thank Flag Link Mon Oct 17, 2011
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
I suggest you avoid this. Usually, the only person that benefits is the seller. You only need 3.5% down or maybe less to get a FHA loan. Google lease to own. See what more info you can get.

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Mon Oct 17, 2011
The answers below are correct, terms vary too. Some things are pretty much fixed, such as if you don't purchase the house by the specified time you will lose money (deposit and the extra you pay each month for the option to buy) which can be thousands. You have to be able to qualify for a loan to buy and the house must appraise for the purchase price. That appraisal can be difficult to get in a market with prices going down each year, when prices go up it's not hard, but you and the owner will decide now what the price you will pay in a year (or whatever time period you choose). If the price goes down the bank says NO and you can't buy and you loose the deposit and option money. It often is a better deal for the owner than for the buyer. I suggest you save until can buy without a rent-to-buy deal.
0 votes Thank Flag Link Mon Oct 17, 2011
rgonzalez5150,
Lease to own is the same as rent to own. You pay rent according to your lease and have an option to purchase the property sometime in the future. Terms and consditions vary so review your lease to own contract carefully, and possibly have a real estate attoreny review the agreement with you prior to signing. Sometimes a portion of the rent paid is applied to the purchase price of the property.

All the best,
Gary Geer

http://www.GaryGeer.com
0 votes Thank Flag Link Mon Oct 17, 2011
There are variations of rent to own also known as lease purchase. The most common is a buyer gets prequailified for a mortgage, they need a year to save for a down payment and closing costs. The owner of the property leases to them and signs a purchase agreement to purchase in say 1 year. They then credit the buyer with a specific amount each month towards the down payment and or closing costs. If you dont purchase at the end of the lease there is no refund or credit.


http://www.trulia.com/blog/scott_godzyk/2010/06/rent_to_own_…

Please see my blog with a full list if tips and advice on how to rent to own a home.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Oct 17, 2011
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