You may probably already be familiar with a basic rental lease, but you should also be aware that the fine print is a lot more complicated in a rent-to-own agreement. Just like any contract, pay close attention before you sign it.
Misunderstandings in the contract can lead to unpleasant surprises. This is one contract that you should have reviewed by a knowledgeable real estate attorney.
Make sure the contract you are entering into is legal. Lease options are actually not allowed in every state. Make sure you have a lease-option agreement. That is a contract that will give you the option to buy during a point in the rental term. Avoid a lease-purchase agreement, which legally obligates you to buy and may incur penalties if you decide against purchasing the house.
One particularly unpleasant surprise would be any language in the contract that permits eviction for any minor infraction. This could potentially cost you a lot of money after you’ve already made a significant investment. The agreement should clearly specify the circumstances that could void the contract.
Another contractual surprise would be a clause that allows the seller to increase the price of the house if the real estate market is also climbing. Most buyers enter into rent-to-own agreements with the understanding that the initial agreed-upon price will remain rigid throughout the term of the lease. Such a clause could potentially negate that understanding.
The contract should also specify the home price and the deadline to exercise the option to purchase. Cost of rent should be detailed as well as what percentage of the rent payment will end up going towards the purchase price. The lease option should also spell out who is responsible for maintenance and repairs as well as clearly define those repairs and maintenance requirements.
Remember to always exercise care and caution when reviewing a contract so that renting will be smooth path and save you money down the line.