My sister and her husband sold their first house on a Rent-to-Own basis. In their case hey held the mortgage and the people who were going to purchase it paid them on a monthly basis. It was all handled through a lawyer. The agreement was that if they missed two payments then the house would go back to my sister and her husband. It was much cheaper for the people to buy the house this way. The people buying the house were relatives of my brother-in-law. They went through a lawyer and has all the proper paper work done up because even thought it was family they didn't want to take the chance of getting burned. It all worked out for them which was great.
I think most people do use a realtor to do this. I think the contracts vary as to the maintenance required and the specific terms of the agreement. A relator is very helpful ot the process particularily if the landlord or seller is no where in the region. A realtor is ideal in these types of circumstances. I think most rent to own situations benefit both parties, and the contracts must be all different, based on the particular state, and stipulations concerning the contract.
That's also the standard here, contracts vary between the seller and the buyer. For a rent to own to prosper, there should be a down payment that is substantial (not clear on how much but my idea is 10% of the cost of the house). The crux is the penalty clause of the contract like that case of L_B, the 2 months default on rental would rescind the contract and forfeit all the payments in favor of the seller (landlord). That is quite unfair to me. Maybe there should be an allowance of 3 more months before the forfeiture.
Rent to own schemes are one of the numerous ways that have become available for people who can't afford a deposit and upfront payment to be able to buy their own homes. To me it's just not necessary and just another way of fooling people into thinking they can afford something when they can't. Instead of coming up with schemes like this, more help should just be given to first time buyers who can't afford to get on the property ladder.
I think we can find a lot of information on google, but either cases I definitely think that buying is the best option because after all we are paying it to ourselves.
I do agree with you on that one but that is the arrangement that all parties agreed upon going into the contract.
You are right that rent to own homes cater to those who cannot pay the downpayment as required by the bank. However, most rent to own schemes here require a downpayment so the tenant has to put up a big amount of cash. My sister-in-law entered into such an agreement in 2006 for a small house costing 1.2 million pesos. The downpayment she paid was 200,000 or 20% of the principal amount. I don't remember the monthly installment but it was huge when the total is computed. But she was not able to finish the term because she had left for the US. What she did was to sell it on an "assumed balance scheme."
The rent to home schemes in my opinion do help people such as people taking their first steps on the property ladder but I still think there could be better options out there as the terms of the contract are aimed more in favour of the property owner at the beginning rather than the person who hopes to own the property at the end of the agreement.
Many times that what it takes, giving the first steps can be enough to help someone be in the right way to actually be buying a home.
A LL friend has been doing it extensively, even via Ebay, too. He keeps the title and avoids a lot of hassles. Some Federal law makes is harder to carry paper. Today, a tenant e-mailed me saying that since he had paid about $ 10 k in rent, he feels I should be happy with 1 year's rent to give him the property. Guess I'll be seeking some wholesale buyer instead. Many people don't have the cash for a down payment...
