A person with bad or limited credit history can buy a rent-to-own house without upfront funding. A rent-to-own arrangement allows the seller to function as the landlord and get steady payments while remaining the home’s legal owner. A portion of the buyer’s rent payments goes toward the purchase price of the property for the duration of the rent-to-own arrangement. The purchaser has the right to use a buy option in the arrangement to buy the house while the contract is in effect.
Purchase Deal
A properly signed and implemented rent-to-own arrangement is legally binding provided that the wording doesn’t violate existing state or federal laws. The rent-to-own contract contains all of the conditions of the arrangement between the seller and the purchaser. The amount of time the contact is successful have to be specified in the record, as well as restrictions imposed by the seller along with the total purchase price of the house. The responsibilities of each party in the agreement are spelled out in the record. The stated purchase price cannot be renegotiated at the conclusion of the arrangement, when full payment is due, unless a permissible clause is comprised or both parties agree to do so. A house that is worth less or more than when the arrangement was signed remains the initial price when the buyer exercises the purchase option. Neither the buyer nor the seller can bring a lawsuit in court to resist the agreed-on purchase price. Important flaws that weren’t disclosed on the arrangement but found after, like house mold, generally enable the purchaser to terminate the arrangement.
Monthly Payments
The total payment to get a rent-to-own house is divided into two segments. The option fee is that the fraction of the buyer’s payment that goes toward the purchase price of the house. The rest of the funds, called the rent premium, is that the rent money the buyer pays the owner for residing in the house. A purchaser who fails to buy the house at the conclusion of the rent-to-own arrangement forfeits the option fee to the seller. The purchaser cannot sue the landlord to recover the alternative fee solely based on his own failure or inability to satisfy the purchase option in the conclusion of the agreement term.
Repairs
Repairs and maintenance are either the seller’s or the buyer’s duty, based on the details of the arrangement. Any repairs made and paid for by the responsible party are usually not refundable. A buyer who makes fixes, such as repairing a roof, cannot sue the seller after to recover the price if she doesn’t use her purchase option before the arrangement ends. Repairs made in the seller’s price are not recoverable under any circumstances, unless the repairs were necessary because the purchaser resulted in the harm to the house.