If you have any questions regarding the purchase of leasing, the rental option or a real estate transaction, please contact us. Beware of hire-purchase agreements – You may be legally required to purchase the home at the end of the lease, whether or not you can afford it. (Here is a website that offers leasing purchase templates. And here`s one for a typical housing rental agreement. A big difference!) An essential distinguishing feature of the rental option is that the contract does not oblige the tenant to buy the property, but obliges the seller to sell the property if and if the tenant correctly exercises the purchase option. In the case of such a lease option agreement, the seller is required to sell, but the buyer is not buying. For this privilege and the right to purchase the property at any time during the lease, the tenant also pays an option fee in advance. Option money is rarely refundable, and while no one else can buy the property during the option period, the buyer can sell the option to someone else. The buyer is not obliged to purchase the property; If they do not exercise the option and buy the property at the end of the option, it simply ends. For the seller, these contracts are a way to generate rental income from likely motivated tenants who have more than one temporary property obligation since they intend to own them in a year or two. If you want to buy a house and your creditworthiness is poor or if you do not have sufficient resources for a count, your financing opportunities may be limited. Getting a mortgage with traditional means can be difficult, if not impossible. A hire purchase agreement is an alternative that can make the purchase easier if the buyer is unable to secure a mortgage with a lender.

A hire purchase agreement can be attractive to a seller in a competitive market because it is able to retain a buyer and ensure a monthly payment. The seller is usually able to claim a higher rent than he would normally get in a traditional lease. At the same time, a seller who wants to have access to a large amount of money does not receive these funds when buying a lease. If the value of the property increases after the expiration of the rental agreement, the seller cannot realize the increase in value, as the parties are usually tied to a purchase price. The main disadvantage is, of course, that hire-purchase contracts are multi-year contracts. This comes with a certain degree of risk and uncertainty that many sellers want to avoid. For the first time in the late 1970s and early 1980s, leasing option sales became popular financial instruments and were primarily used as a means of circumventing alienation clauses in mortgages. . . .