Basically, there are two forms of Rent-To-Own platforms. One is a Lease Purchase and the other is a Lease Option.

Both are very different and both carry with them their own types of baggage. So, What is the difference between a Lease PurchaseLease Option and rent-to-own program? Often, because of the way they are actually implemented, the difference is in name only.

Remember too, that Arizona is the ONLY state in the union that allows Real Estate Agents to practice Contract Law. Therefore we have the responsibility and right to prepare any type of instrument used to convey interest in real estate. Arizona real estate agents are held to a higher standard than any agent anywhere else in the USA, in terms managing and manipulation of contract language in contract documents.

Minnesota Residential Real Estate Purchase Agreements - Earnest Money - Gary C. Dahle, Attorney at Law

Occasionally, the process for determining the future price is agreed to between the buyer and seller and will be implemented at some future date.

An example is where an independent, licensed real estate appraiser, paid for by either party or jointly, before the expiration of the lease period, will determine a future price. So, what does it cost to get into a home under a Rent-To-Own program?

Under either program there is an initial payment of money to the seller " earnest money " if a Lease Purchase or, under a Lease Option" option consideration "usually in an amount greater than the normal security lease purchase agreement earnest money and in lieu of a security deposit.

Earnest makes a lot of money thesaurus is also considered to be part of the down payment that may be required by the seller or lender at closing.

How to Draft a Purchase and Sale Agreement (with Pictures)

A word of caution about "projected purchase prices and projected appraised purchase values". If the property does not appraise for the agreed purchase price, the contract is said to have a lease purchase agreement earnest money appraisal contingency" and therefore a court of law could consider the contract "un-enforceable" because the contract has developed a "failed contingency".

Glossary

If the agreement is determined to be "unenforceable" then a court of law could also determine that the " earnest money " or " option consideration " is refundable because there was never an enforceable contract. However there have been court rulings in many states that overrule some exculpatory language if the courts find that the exculpatory language did not provide for an equitable contract.

The terms "equitable" is defined as "what is good for one is good for the other" or "evenhanded".

This is the real world. It may be that some portion of the monthly rent payment could or would count toward the down payment but much care must be taken here. It requires discipline to do that but so does being a responsible homeowner! A final word about rent credit: These transactions are traditionally stop gaps for the seller in terms of some relief from the debt load of mortgage payments.

Lease to Purchase Agreements

However, at the end of the day, if the RTO does in fact fail This article written by "G-II" Varrato II, Coldwell Banker Residential Brokerage. Live chat by Live Person.

We have been asked many times, to write an article about the RTO Rent-To-Own programs. EARNEST MONEY So, what does it cost to get into a home under a Rent-To-Own program? Lease Option So, what's the difference? Click Here To Read Some Really Scary Inspection Stories.