You have finally decided to become independent. And as you are still not sure if you are ready and meet the conditions to become a homeowner, you have opted to rent a property that you are guaranteed to sell in a couple of years. Without a doubt, it is a great option. But are you clear about what terms the contract should include so that there are no misunderstandings or conflicts with the other party? Find out what clauses a rental contract with an option to buy should include.
Remember that, due to the particularities of the formula, it is advisable to sign a rental contract with an option to buy in which all the conditions that you have agreed with the landlord and future seller are clearly stated. Generally, the contract that is signed in these cases is known as a double or mixed contract, since it includes, on the one hand, the conditions of the lease and, on the other, those of the sale.
The rent-to-own contract must reflect…
Thus, the rental contract with an option to purchase must reflect the following aspects as precisely as possible.
- The agreement reached between the parties, whereby one is obliged to sell the property while the other reserves the right to purchase.
- Period during which the tenant may occupy the property under the lease formula.
- Amount of monthly rental income.
- Who will be responsible for paying the community fees and any possible renovations during the time the rental agreement is in force.
- The tenant may extend the lease. In this case, the purchase option will expire as there are two linked contracts.
- If the tenant is more than two months late in paying the rent, he or she will lose the option to purchase.
- The price at which the purchase option will be exercised and the method of payment. It is advisable to indicate the monthly payment set for the lease and that these amounts or the percentage agreed upon will be deducted from the sale price afterwards.
- Period within which the tenant may exercise the option, establishing a maximum, which is usually five years to the third party the house during the term of the agreement.
- The owner has the obligation to maintain the contract and not to transfer, rent or sell
- Penalties if one of the parties breaches the agreement. For example, it should state how you will be penalized if you decide not to buy the property. You should know that cancelling the transaction means losing the entire amount invested in the rental. The owner of the house will not be obliged to reimburse you for the amounts contributed even if they were higher than the market average.
The contract should also reflect any additional guarantees that the owner may require. It is common that when the purchase option period is extended too long, the owner of the property will request guarantees that the purchase will be formalized. And he could request an advance payment as what is known as a deposit.