How to Fill Out a Lease With Option to Buy Form. Lease agreements with an option to buy or, more simply, rent-to-own agreements become popular when the economy sours. If you are looking for your next home, you can do well by renting a home for a year or two before you decide to buy it. Having a lease agreement with an option to buy can benefit...
Lease agreements with an option to buy or, more simply, rent-to-own agreements become popular when the economy sours. If you are looking for your next home, you can do well by renting a home for a year or two before you decide to buy it. Having a lease agreement with an option to buy can benefit owners having a hard time selling their properties and financially constrained buyers recovering from job loss. Knowing how to negotiate the terms of lease agreements with an option to buy commands center stage in constructing a win-win situation.
Things You'll Need
Lease agreement with an option to buy multipart form
Dark blue ink pens
2 types of personal photo identification
How to Fill Out a Lease with Option to Buy Form
Read the lease agreement carefully to identify the property and how you can use it. If there is no provision in your agreement for allowing a pet cat or dog to share the property and you need it, then insert the provision in the agreement.
Think about your lifestyle when filling out the lease agreement. Alternatively, if you are the owner, think about how you would like your tenant to treat your property.
Establish how and when you will pay rent and late fees. You want payment flexibility, so ask the owner for a 15-day grace period before late fees kick in. To make it more attractive, offer to pay via direct bank debit.
Owners want guaranteed payment and can have it by requiring automatic debits from tenants' bank accounts on certain days of the month. Otherwise, the owner should give tenants address labels stuck on envelopes for each month a payment is due.
Tenants should stipulate in the agreement that the owner or manager send a monthly summary statement. Most owners will agree.
Specify the amount of and the conditions upon which the security deposit will be returned or not returned. Always include who is responsible for the different types of maintenance and repairs on the property during the term of the lease.
A nonrefundable cleaning deposit is often a part of the security deposit section.
Negotiate the default provisions of your contract to identify the consequences of not paying or satisfactorily meeting the terms of the lease agreement. Contingencies should anticipate and prepare for renter default as well as owner default.
Read and initial the "quiet enjoyment" part of every lease agreement. It's a promise that the tenant may peacefully and quietly enjoy the property without harassment from the owner or managers. It also stops landlords and owners from doing construction in the backyard of the property.
Pay close attention to the assignment and subletting provisions of the lease agreement. You may or may not be permitted to assign your lease agreement to another person. If you plan to rent the property and then turn around and rent it to someone else for a profit, make sure the landlord or the owner knows it and agrees to it. This provision will require both your and his initials.
Establish the time you wish to have to decide whether to buy the property on the option-to-purchase form. Most lease option agreements span 12 to 18 months. Negotiate the monthly rent amount and price of the property with the owner. Part of the monthly rent should be credited to deposit, down payment or the sales price of the property.
Set a selling price 5 to 10 percent above current market value if you are an owner. In addition, establish a slightly higher-than-market rent for the property. Agree to a good-faith deposit. This amount can range from $100 up to $1,000 or more.
Sign and initial all the paperwork in dark blue ink and in front of a notary public. Show the notary your identification papers and insist on a copy of the agreement for your files. Most real estate offices have at least one notary available during working hours.
Tips & Warnings
If you are not sure what you are doing, hire a real estate attorney to read through the agreement and advise you of additional items you have left out or items you might want to renegotiate before final signatures.
Consider including contingencies into your purchase option agreement. For example, "... closing is contingent on satisfactory pest report paid for by the current owner ..."
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