anon_416 on May 25, 2010
There are several different types of rent to own agreements. In one of the most common â€œrent with option to buy agreements, a certain portion of each monthly rental payment is applied toward a down payment for the purchase price of the home. The total purchase price, along with the monthly rent and the amount to be applied to the down payment each month, are negotiated and agreed upon at the start of the agreement. This gives the potential buyer some protection against rising real estate prices and the seller some protection against falling real estate prices over the term of the agreement. At the end of the agreed-upon rental term, the renter has the option to buy the house and can apply the accumulated down payment to that purchase. Normally, your rent is slightly higher in a rent to buy situation because some of that monthly rent is applied to the down payment. You may also be required to pay a deposit up front. In those cases, the landlord may keep your deposit if you decide not to buy the property at the end of the rental term.
anon_415 on May 24, 2010
A rent with option to buy agreement is a form of rental contract that allows the tenant to rent a home knowing that they can buy the home later if they should decide to. The agreement will specify terms â€“ a purchase price, a time limit during which the tenant can choose to buy, and how rent payments before the decision to buy will be credited towards the purchase price. Normally the agreement will also include a right of first refusal, meaning that the landlord cannot sell the house to a third party without first asking the tenant if they would like to buy the house.