what is the difference between lease to own and rent to own?

Asked by Tina Lynch, Pilot Mountain, NC Wed Feb 1, 2012

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3
Don Tepper, Agent, Burke, VA
Wed Feb 1, 2012
Neither one is really correct terminology.

They both mean that you're renting now and (possibly) buying in the future. So, from that standpoint, "lease to own" and "rent to own" can mean the same thing.

The correct terminology is either "lease-option" or "lease-purchase." And there are differences.

A lease-option is a lease accompanied by an option giving the tenant-buyer the right (but not the obligation) to buy. So, at the end of the lease, the tenant-buyer could simply walk away with no further obligation. A lawyer would call this a "unilateral agreement"--it requires an action by one party (requiring the owner to sell) but doesn't require the tenant-buyer to buy.

A lease-purchase is a lease accompanied by a purchase agreement committing both the tenant-buyer and the property owner to conclude the transaction. At the conclusion of the lease, the tenant-buyer would be obligated to buy and the owner would be obligated to sell. A lawyer would call this a "bilateral agreement"--it requires action by both parties--the owner to sell and the tenant-buyer to buy.

Probably a majority of what you see as "rent to own" or "lease to own" are actually lease-options.

So:

"Lease-to-own" and "Rent -to-own" may mean the same thing. Either one can mean a lease-option or lease-purchase.

Lease-option: The seller has to sell but the tenant-buyer doesn't have to buy.

Lease-purchase: The seller has to sell and the tenant-buyer has to buy.

Hope that helps.
3 votes
with lease purchase would you still have to hire a real estate attornrey?
Flag Wed May 9, 2012
Magick8989, Home Buyer, Winston-Salem, NC
Mon Jul 3, 2017
Is renting a mobile to own is like buying a house for first time buyer
0 votes
Yes, I thought it was one in the same just wanted to check to make sure
Flag Sat Jul 8, 2017
Bill Eckler, Agent, Venice, FL
Wed Feb 1, 2012
Tina,

They are essentially "one and the same." Rent/lease to own is a very misunderstood program. Several things to keep in mind are that the owner will normally want a fairly large down payment to protect their interests and that only a portion of the monthly rent is credited to the actual balance owed. And finally, changing your mind usually results in losing your entire deposit.

These programs are providing a definite need especially for those individuals that are suffering from financial difficulties resulting from distressed property situations but they need to be ventured into carefully and with legal representation to protect your interests as well.

Good luck,

Bill
0 votes
Thank you
Flag Sat Jul 8, 2017
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