Important Questions About Rent To Own
If you are considering buying your next home using a Rent-To-Own strategy (often also called buying on a Lease-Option or buying on Lease-Purchase), then you'll get some amazing value from the following abridged list of questions to discuss with your attorney.
These questions will help you crystallize in your mind the exact terms of the Rent-To-Own transaction and save you the valuable dollars you might otherwise spend at $200 to $400 or more per hour asking your attorney to explain some of the options. While I strongly encourage everyone to get the advice of a competent attorney before entering into any agreement to buy a home, this should help point you in the right direction for that conversation.
I developed these questions as a checklist primarily to help my buyer clients that were looking to buy Fort Collins Rent To Own Homes get all their questions answered when talking to their attorney before doing the transaction.
These questions will help you crystallize in your mind the exact terms of the Rent-To-Own transaction and save you the valuable dollars you might otherwise spend at $200 to $400 or more per hour asking your attorney to explain some of the options. While I strongly encourage everyone to get the advice of a competent attorney before entering into any agreement to buy a home, this should help point you in the right direction for that conversation.
I developed these questions as a checklist primarily to help my buyer clients that were looking to buy Fort Collins Rent To Own Homes get all their questions answered when talking to their attorney before doing the transaction.
Rent To Own Down Payment
Questions to consider with your attorney about down payments on Lease-Options and Lease-Purchases
Here are a few questions to ask your attorney about the down payment on your next Rent-To-Own transaction:- Is my down payment refundable (and under what circumstances) or is it non-refundable?
- If I made my down payment earnest money as part of a purchase contract with a Lease-Purchase could it be refundable?
- If I made a small part of my down payment the option fee with a Lease-Option and the rest of it earnest money could the majority of it be refundable?
- Can I make the down payment over time? Will that still be refundable or non-refundable?
These are a sampling of just a few of the questions that are included on the full checklist I give to clients and include in the live and recorded classes on buying on a Rent-To-Own.
Photo by AMagill.
Rent-To-Own Rent Credit
Apply part of your monthly payment toward the purchase
- Can part of my payment be applied to the purchase (like with a traditional mortgage payment)? How much can we apply toward the purchase?
- If I end up not buying the property is the money from the monthly rent credit that is supposed to be applied to ward the purchase refundable back to me?
- Will this help clarify that we are looking at this transaction as a equitable mortgage situation and not just a rental agreement and a purchase contract (Lease-Purchase) or rental agreement and an option agreement (Lease-Option)?
These are just a few of the questions relating to rent credits that I encourage my clients to discuss with me and then to ultimately discuss with their attorney regarding the actual paperwork for the transaction. These few questions alone can save you hundreds if not thousands of dollars on your next Rent-To-Own transaction.
Photo by PhotoSteve101.
Repairs On Rent-To-Own Homes
Ask your attorney who is responsible for repairs on a Rent-To-Own
- Will the seller be paying for the repairs on the home during the rental period?
- Will I need to pay for any of the repairs? If so, which ones and when?
- What happens if the seller cannot afford to make the repairs? How do we handle that? If I end up having to make the repairs do I get credited for that somehow? How?
- What happens if I am supposed to make the repairs and I can't afford to make them?
These are just a few of the questions that I teach and encourage my clients to use regarding the repairs on the home they're buying on a Rent-To-Own that relate to the repairs on the property.
Photo by CleverCupcakes
Purchase Price on Rent-To-Own Homes
Questions about purchase price to discuss with your attorney
- Does the purchase price stay the same for the entire duration of the lease?
- What happens to the price if I can't buy within the agreed upon time of the lease?
- Does the purchase price change if the seller needs to do large repairs on the property during the lease (like replace a roof or upgrade any of the major systems)?
These are just a few of the questions from a more comprehensive list that I encourage my clients and people that take my class on buying properties using a lease-option or lease-purchase to discuss with their attorney about the paperwork for their transaction.
Photo by James.Thompson.
Other Question Categories
Other question categories to discuss with your attorney
Plus, consider asking questions from these other major categories when talking to your attorney:
By the way, one of the ways that I help my buyer clients and people that purchase my How To Buy A Rent-To-Own Home course is to encourage them, if they do not already have it, to become a member of Pre-Paid Legal. For less than $1 per day, they can call their attorney and get answers to any legal question including buying a home using a Lease-Option or Lease-Purchase. Get the membership before you start looking and ask all the questions above plus any others that come up and keep the membership to be able to ask questions that come up in the future. Also, you can get a discount from them if you have their real estate attorney write up your Rent-To-Own paperwork often saving yourself more than cost of the membership.
- Duration of the agreement (lease, option/purchase contract and any pre-agreed extensions)
- Forcing compliance to the agreement
- Legal issues (i.e. bankruptcy, foreclosure, escrow, etc)
By the way, one of the ways that I help my buyer clients and people that purchase my How To Buy A Rent-To-Own Home course is to encourage them, if they do not already have it, to become a member of Pre-Paid Legal. For less than $1 per day, they can call their attorney and get answers to any legal question including buying a home using a Lease-Option or Lease-Purchase. Get the membership before you start looking and ask all the questions above plus any others that come up and keep the membership to be able to ask questions that come up in the future. Also, you can get a discount from them if you have their real estate attorney write up your Rent-To-Own paperwork often saving yourself more than cost of the membership.
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cmoneyspinner
Feb 17, 2012 @ 11:09 am | delete
- Excellent article sir. And those circles are really great visual effects. :)
I have supplied a link to this lens at my lens about lease-to-own real estate.
Wishing you continued success!
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JamesOrr
James Orr is the founding director of the Creative Real Estate Education and Awareness Foundation, a Colorado based but nationally focused non-profit that... more »
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