Home Selling in New Jersey>Question Details

Dannie Smith, Both Buyer and Seller in New Jersey

How much should i ask for a Deposit on a lease to own for a $350,000 Home?

Asked by Dannie Smith, New Jersey Tue Jun 3, 2008

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What are your terms in the lease to own?
You should collect the same as any other rental situation usually 1 1/2 months security deposit because you still need to protect your property.
If they should decide not to purchase and do damage to your home, you'll be wishing you asked for more.

Are they putting any money down for the lease to own?
What percentage of the monthly rent will go toward the purchase price?
Do you have verbiage in your agreement stating if they decide not to purchase, any amount already paid monthly will be considered rent and no money will be refunded to the renter.

Have a real estate attorney write up this special kind of agreement to save headaches later.
0 votes Thank Flag Link Tue Jun 3, 2008
Are you talking about the security deposit or the down payment on the purchase contract? Normally for purchase it can vary, depending upon how long the rental part of the contract is. Obviously the person doesn't have 5% or 10% or they would get a loan. You should charge the security deposit for the rental part, one month's rent. Then there should be an earnest money deposit, of at least 1%. Just to be sure the person is serious.
0 votes Thank Flag Link Wed Jun 4, 2008
1.5 months is the answer... that is the maximum under state guidelines.
0 votes Thank Flag Link Wed Jun 4, 2008
Dannie,

In NJ you cannot take more than 1 1/2 month's security deposit for a rental. In addition, it is not just a simple rental you are dealing with and you should seek the advice of your attorney to draw up a specific contract with terms regarding the lease and the purchase. Again, should they decide not to go forward with the purchase, you may or may not be bound to give them back a percentage of their payments. I would have your attorney be very specific with the terms of the lease to own to protect your rights should they decide to back out of the purchase.

Good luck.

Gina Chirico
Prudential NJ Properties
973-239-7700 ext 132
973-715-1158 cell
GinaChirico@PruNewJersey.com
0 votes Thank Flag Link Tue Jun 3, 2008
Dannie,

The state sets limits on what can be taken as a security deposit. the security deposit must be deposited in a seperate account. A record of this needs to be given to the tenant. A lease purchase can be a tricky deal to put together. There is a reason why the person can't purchase today. Can you be sure that they will be able to in the future? I suggest you get a realtor or attorney who is experienced in this matter to give you the proper guidance. You want to be sure you are in compliance with State regulations
0 votes Thank Flag Link Tue Jun 3, 2008
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