Option to purchase agreement

Option to purchase agreement is entered into by a person who does not qualify for conventional mortgage or financing due to poor credit rating. The tenant signs a contract with property owner wherein he indicates his consent to pay a rent to enjoy the property for a fixed period; at the termination of which the renter gets the exclusive right to take possession of it at a price that has been previously agreed upon.

The tenant is required to pay a non refundable option fee which goes towards the purchase price of property. The tenant then shells out an amount typically equivalent to the rental sum on monthly basis which is inclusive of the option consideration and the mortgage fee owed to the owner.

The renter stands to have his entire option fee forfeited if the desired purchase does not take place. In the event of inability to purchase the property at the expiry of contract, the owner can extend the rental period or convert the lease agreement into a conventional rental contract.

What is Lease Option

A lease option is the ability to rent a property with the option to purchase it. The owner and renter enters into an agreement whereby at the termination of the lease option, the renter is bestowed the right to take possession of the property. 

The option is considered by doling out a fee by the renter to the owner which customarily comes around 1 to 5% of the agreed upon purchase price. 

This option confers the right of purchasing the property at a later date to the renter. In the event of failing to exercise the option, the fee is not refunded to the renter. 

The property is appraised at a price con-sensually arrived at considering the cost valid at the time of exercising the option or conception of the contract. The typical length of lease option is 1 to 3 years. 

Everything functions similar to a lease except that a schedule is chalked out when the renter can contemplate to buy the property.

All About Rent to Own Contracts

If you have gotten bored of living in a rented apartment, and want to have your own place, then buying one is the best option. The situation then can become really critical, and you may lose your affordability. What to do then?

The simple solution to that is opting for rent to own contracts. These are also known as rental purchases and are legally documented transactions. This type of transaction started in USA during 1950s and 1960s, and then onward has helped loads of people.

Initially it was meant for various consumer goods but then prospects like real estate also came under the preview.

A question by now is forming in your mind, why rent to own. To answer that, one has to think about the various situations in life. Under some of the situations, one may not have enough money but won’t like to waste it by renting a house, or the way of paying may seem better and convenient to people.

For such requirements rent to own contracts can be really helpful. Under this procedure, you have to pay extra rent for your home per month and at least 5% of the purchase amount as up-front fee.

Among the total amount, the actual rent is taken by the previous owner and the extra rent helps you to buy the place gradually.

Rent to Buy: Is It a Good Option?

Rent to buy is an option under which you can buy properties without paying a hefty sum all at a go. This legal procedure provides you with time to arrange money and at the same time you can have first hand experience of the property you are going to buy.

In short, this is a procedure that allows you flexibility, freedom and time. All these are crucial when you are going for a lifetime commitment for something. You have all right to be completely sure about something for which you are going to arrange a loan or sacrifice little luxuries of life.

If it is about, a rent to own home project, then you need to be more cautious and for that purpose have to find the advantages and disadvantages of the process. Most important advantage of this procedure is it allows you a time of 12 to 36 months, and within that time, you can enjoy first hand experience of the house and then decide upon it.

As you don’t have to make any major commitment beforehand, there is nothing to worry. It will be a big problem if you cannot obtain a loan and get evicted, you will lose all the money invested. Fall in price of the house can be a loss too. You cannot ignore the convenience though.

Purchase Option Agreement Can Be Your Choice

Once you enter the domain of agreement, various legal terms are bound to confuse you. Such a term is purchase option agreement. Though it may seem a little complicated at first, if you dig deeper you will find that it is nothing but a short name for lease with option to purchase contract.

Now if, you are thinking that the discussion has become more confusing, let’s go for the definition. According to the so called textbook definition this one is a contract that has all the elements of a rental agreement with the flexibility of refusal. If you want you can refuse but if you want you can buy too.

If you want to go for a purchase option agreement, first of all you have to find a property, be it a house, an office, some furniture and home appliances or something else. In the next step, you have to find interested people who are up for such an agreement.

Then you will be able to settle for a deal and start paying the money as rent. These may seem a bit tough, and complicated, in reality, they are easier that thought. With some help from the internet, you will be able to solve problems and find the property you looked for. You must remember to take advice from a good real estate lawyer.

Are You Looking for Sublease Agreement

The use of the word sub before any word may seem to take away the punch from it, and you may think the same logic is applicable to sublease agreement too. If you are thinking so, then you are wrong. The case is a bit different here.

This special type of agreement allows one to lease, the property that he/she has taken on lease, to a third party. It means, if you have taken a building on lease from someone, you can lease that building out to a third party and reap the benefit. It can prove really helpful.

For instance if you want to take a car on a lease, you can contact a relevant person and have one. You will have the agreement to protect you legally. Then if, you are interested in some extra income, you can legally lease it out to a third party with the legal procedure called sublease agreement.

This system is not much popular in the vehicle industry, but if you want you can make this work and bear profit for you. If you lease the car, to a traveller or a person who is visiting your neighborhood for a short stint you will have profit. As the third party will be responsible for any damage during the period mentioned in the agreement, you will be free from worries.

What is a Lease Agreement

What is a Lease Agreement : Some Important Info

What is a lease agreement is the first question that comes to mind after listening to the phrase. Common people are not much aware about these legalities, and that can be a drawback sometimes.

So, getting informed about these things is important. To go by the textbook definition, a lease agreement is essentially a legally written contract that can concern two persons or two organizations.

Among the two parties one has some property and the other is renting or borrowing that property for a certain amount of time. This document contains the terms and conditions decided by the two parties on the topic.

Some other information in this context is important too, as knowing what is a lease agreement may not be enough for the deal with a situation. The function of such a document is to protect both parties and help them if any legal confusion or problem crops up.

Most of the lease agreements can be divided into two brad categories, and they are commercial lease agreement and residential lease agreement. In the former one is used for business purpose and the later one is for landlords and tenants.

The time of a lease can vary from months to years based on the requirement of the parties. In short this agreement will help you to deal with things better.