A common question from people looking at renting to own a home is “are you required to buy the home in a rent to own agreement ?” at the end of the rental term.
As an example…
… let’s say you found a great Southern California rent to own home and agreed on an attractive rent to own agreement (lease option) with the seller that looked like this…
– $385k option to purchase price
– $15k due at move-in (applied 100% to the purchase)
In the above example, you have the opportunity to purchase the home for $385k within 36 months (you may purchase the home BEFORE the agreement ends with no problem if you would like).
So, Are You Required To Buy The House In A Rent To Own Home Agreement?
If the end of the lease term comes up and you’re not ready to purchase the home… but you still love the home and want to live there… just talk with the owner and usually they are willing to offer you an extension on the agreement.
Often times, if you’ve been a great renter and show a genuine intent to buy the house… the seller will work with you (it’s in everyone’s best interest).
If the end of the lease term comes up and you’re just not ready to buy and you don’t want to stay in the house… you can move out and not purchase the house… with no penalty.
What Happens To The Money You’ve Paid The House Owner Up To This Point?
If you choose not to buy the house, the time you spent in the home is treated just like a rental… since you didn’t exercise your option to purchase the home.
That’s the key distinction you need to be clear on with rent to own home programs.
There are two parts to the agreement…
- A Rental Agreement: First first part is a normal rental agreement. You pay a monthly rent on the home for a specified term.
- The Option To Purchase: This is a separate agreement that gives you the option to purchase the home for an agreed upon price at a future date.
If you decide not to buy the home… you’re just deciding not to exercise your option to purchase the house… and everyone walks away looking at that past time as a rental.
Really it gives you as the tenant/buyer great flexibility in the deal. If you want to buy the home… you can at a set agreed upon price. If you choose not to… no biggie!
That about does it for this article 🙂
If You’re Looking for Southern California Rent To Own Houses…
… check out our Southern California rent to own house program on this website and see our available rent to own / lease option homes by clicking the link below.