If you own a property or commodity that can be rented, rent it out while adhering to the strong legal basis on which both parties can rely on.
Rent to own agreement deals with the relationship between the lessor of a commodity and the lessee who rents the commodity. If you are a person wondering about the usage of this agreement, then this article is sure to help you out.
What Is a Rent to Own Agreement?
The rent to own agreement is essential for the property owner and the tenant. The renter gains the temporary ownership of the commodity, whereas the tenant is the individual who is renting the commodity under certain conditions and in the pursuit of revenue.
Also, it allows tenants an option to purchase the rental property. It dictates the basis and framework of laws and regulations on which the renting process shall be conducted.
It legally binds these two parties together, imposing certain responsibilities that shall be carried on in order to make the renting process feasible and correct.
The rent to own agreement oversees all the small steps, any complications involved in the renting process, and shifting of the ownership of the said commodity. It holds both parties liable in the eyes of law regarding the commodity and its lawful accession.
How Does Rent to Own Agreement Work?
The rent to own agreement works in the following way:
- The tenant lawfully gets the temporary ownership of the commodity or property under specified conditions. However, the renter has a proper legal document to adhere to in the form of rent to own agreement.
- The property owner gets the complete information of the renter, some guarantee, monetary security, and the acceptable behavior of the renter for renting the commodity.
- Both parties can include the payment plan with mutual consent. The payment plan is discussed and agreed upon by both parties so the property owner can not change the agreement midway without the consent of the renter.
- The property owner can include insurance of the commodities he is renting and clauses related to any damages to the property or commodity.
- The tenant is able to own the property if he/she is willing to purchase at any time in the agreement.
What Are the Components of Rent to Own Agreement?
The rent to own agreement includes two separate documents, which are the rent agreement and the option to purchase. The basic components include the following:
- Rent to own agreement states that the complete identity and the information of both the parties are defined in detail in the agreement.
- The information is often verified and cross-checked because the process of renting a commodity is a sensitive matter as a renter can use it for any illegal activity so due diligence must be exercised at all times
- The agreement also states the complete timeline of the payments in detail. The date and timing of every payment including the advance as well as the closing payments.
- The process of deciding the price is described. There is usually a proper way of defining the price or the rent of the transference of property, as determined by the law of the state. The rent of the property may be determined by several factors.
Liabilities in the Rent to Own Agreement
The rent to own agreement goes into extensive details about the liabilities that might be imposed in case of the breach of the agreement by either of the parties. The agreement states the liabilities in case of the following breaches:
- When the lessee is unable to pay the payments on the due dates, he/she shall have to pay the fine for late fees.
- The lessee is unable to pay the specified amount in its entirety which puts the liability of immediate return of the property back to the property owner.
- The fees being exchanged between the two parties shall be non-refundable in any case whatsoever.
- The ownership of the property shall be given over to the tenant specified by the property owner in the given time, space, or the clearing payment as specified in the agreement.
- The rent to own agreement states that the property is to be returned in the pristine condition if the lessee does not purchase it.
The rent to own agreement allows an individual to rent his property or commodity to a lessee in return of monetary benefit under specified conditions. The lessee also purchase the leased item at any time during the agreement
If you are wondering where you might find a legal rent to own agreement template, then CocoSign is the right place to be. CocoSign offers you exclusive and well-crafted legal documents. Get your free copy of the rent to own agreement template here.
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