Common Contracts
1 similar Rent-to-Own Purchase Agreement contracts
Rent to own purchase agreement templateRent-to-Own Purchase Agreement • March 22nd, 2023
This type of agreement is popular among renters that want to become homeowners but cannot due to inadequate savings or the inability to obtain a loan. The owner will typically keep a portion of the monthly rent (known as the “rent premium”) and deposit it into an escrow account, where the buyer may also make contributions towards a down payment. The buyer may also be required to make a deposit upfront, known as an “option fee.” This is usually equivalent to one to five percent (1-5%) of the total purchase price. The period in which the buyer can decide to purchase is known as the “option term” and is negotiated by the parties ahead of time. If the buyer decides not to purchase within the option term, their accumulated rent premium and option fee are retained by the homeowner. Due to the additional costs involved, a rent-to-own agreement only makes sense financially if the renters do intend on purchasing the property. Rent-to-Own Pros & Cons A rent-to-own agreement can serve as a great
