How to Set Up a Rent to Own Contract
A rent to own contract is an agreement between a buyer and a seller for large-ticket items like property, automobiles, home furnishings, equipment or commercial space. Also known as a lease purchase, the arrangement can benefit a property owner in cases where prospective buyers are limited. The prospective buyer benefits by being able to use the product or place on a rental basis that she would not otherwise be able to purchase outright. Both the buyer and the seller must set up a rent to own contract documenting the terms of the agreement.
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Things You'll Need
- Investor or buyer
- Item for rent to own
- Terms for contract
- Computer or other professional word processing equipment
- Permanent ink pen
Instructions
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Pricing and Terms
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1
Agree on a final purchase price for the rent to own item.
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2
Define the rent to own monetary terms, including the amount of monthly payments, number of payments, payment due dates and any service or processing fees.
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3
State whether there is a reinstatement policy in which the rent to own contract is still considered valid, if the renter misses or is late in making a payment.
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4
Record the exact date the item is considered fully paid and owned by the renter provided that all terms of the rent to own contract are met.
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5
Identify the party responsible for the goods through the duration of the rent to own contract, including repairs, and damages or loss due to theft or fire or other natural disasters.
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6
Sign the final rent to own contract and make a copy of it for both parties.
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1
Tips & Warnings
Make certain you understand all the terms of the contract fully.
Ask as many questions as necessary to confirm that both parties have addressed all concerns in the rent to own contract.
Consider involving a third party to ensure understanding and completeness of the contract.
Do not sign an incomplete contract or one that has blank spaces that could be filled in or changed at a later date.
References
Resources
- Photo Credit Eagle house in garden. Summer house image by L. Shat from Fotolia.com
