Rent-to-own agreements can open the door to homeownership for buyers who would otherwise be waiting years to correct credit issues or save
towards their down payment to qualify for a mortgage loan. This
arrangement can be a win-win situation for both buyers and sellers with a
properly structured agreement. Typically not found listed, rent-to-own
contracts appeal to forward-thinking landlords, following their
investment plan, who are ready to enact their exit strategy for a
property but aren’t necessarily in a hurry to do so. This option is
appealing to sellers as they can sell at a higher than market price and
earn higher monthly income for the contract duration.
The Four Parts
A written and executed signed lease containing the four basic parts outlined below is an enforceable rent-to-own contract or lease-option
agreement. With a rent to own agreement, the seller must sell you the
property for the agreed-upon terms, given you have fulfilled your part
of the agreement.
For you as the buyer, the optimum word is an option, meaning at the end of the contract, you can choose to purchase the property or cut your
losses and move on. Read on as we explore four basic parts of a
Belleville rent-to-own agreement.
Purchase and Sale Agreement
A fundamental part of a Belleville rent to own agreement is the completed Purchase and Sale Agreement (PSA) as an exhibit to the lease;
this outlines the rights and obligations of the buyer and the seller of
the asset and must be attached to the lease contract.
Exercising the Option
Another basic part of a Belleville rent-to-own agreement is a specific procedure to exercise the option stated in the lease. Options
are financial contracts that give the holder rights to purchase an asset
for the agreed-upon price without obligation. Exercising the option or
enforcing your rights under the contract terms binds both parties to
buying and selling the property.
Legal Description
The Purchase and Sale Agreement must contain a valid legal description of the property, a basic part of a Belleville rent-to-own
agreement. In addition, the description must be legally sufficient for
the property to be transferred or mortgaged. The street address is not
the legal description for use on a deed. Land records are not the same
as the property tax records, and neither may be enough for the legal
description required; the description on the existing deed is the most
reliable source for your description. Most importantly, ensure that the
information in your description matches your source exactly, down to
each letter of each word and the punctuation used originally.
Valid Consideration
Consideration is a legal term used in real estate that describes the value that will change hands as a part of an agreement, an obligation on
the seller to sign and deliver the deed, and the buyer to pay the
agreed-upon price. The agreement of both parties validates the
agreement. The Purchase and Sale Agreement must have valid consideration
as a basic part of a Belleville rent to own agreement in exchange for
the property’s purchase price. Common types of consideration are money,
real property, or a promise to perform some type of action.
Why pay off the mortgage for your landlord? Let the team at Cardinal Creek Properties work with you so you can start enjoying the perks of
homeownership and start investing in your own future today!
The pros at Cardinal Creek Properties can help you fully understand the basic parts of a Belleville rent-to-own agreement and how they
benefit you. Cardinal Creek Properties can help you locate rent-to-own
deals, and don’t forget to ask about our current inventory of the best
rent-to-own properties available now in Belleville. Contact Cardinal Creek Properties today at (314) 467-8137!
