Rent-to-own or lease option contract is an agreement that allows a tenant to rent a property for a specified period before they have the option to buy the property. This type of contract is ideal for individuals who may not have the necessary funds to buy a property outright but are actively looking to own a home. It also serves as a great option for landlords who want to sell their investment property but are having a hard time finding a buyer.

In a lease option contract, the tenant is required to make a non-refundable payment known as option consideration. This payment is usually a percentage of the agreed purchase price and can be used towards the purchase of the property if the tenant decides to exercise their option to buy. The option consideration is usually negotiable, and it`s advisable to have a real estate attorney to review the contract before signing it.

One of the benefits of a rent-to-own contract is that it allows the tenant to have more time to improve their credit score, save for a down payment, or establish their income before they buy the property. During the rental period, the tenant is given the chance to live in the property and pay rent, just like any other tenant. The rent amount is usually higher than the average rent, but it`s also negotiable. It`s worth noting that the tenant may lose their option to buy the property if they default on the monthly rent payments or don`t exercise their option to buy within the agreed time.

The lease option contract also outlines the purchase price for the property, and this price is fixed for the duration of the contract. It means that if the property`s value increases during the lease period, the tenant still buys the property at the agreed price, which can be a good thing since they`ll be getting a good deal. However, if the property`s value declines, the landlord may take on the loss, depending on the agreement in the contract.

In conclusion, the rent-to-own lease option contract is a win-win for both the landlord and tenant. It allows the tenant to buy a property they want while giving the landlord an opportunity to sell their property. When considering this type of contract, it`s essential to have a real estate attorney to review the terms and conditions carefully. It`s also advisable to have a real estate agent to assist in finding the right property and negotiating the terms of the lease option contract.