Facts about the Lease to Own Agreement PDF template

When you sign a lease to own agreement, you're agreeing to a traditional lease that offers you added options. You're allowed to purchase your rental property at some point after the tenancy begins. In most cases, these rental agreements are used when people rent single-family houses. There are possible financial benefits for both the landlord and the tenant.

What Is a Lease to Own Agreement PDF Form Used For?

There are two basic components to a rent-to-own agreement. The first is a standard lease, with all the information you'd expect to find on the lease. The second is a purchase option. Depending on the landlord, these might be presented as separate documents, or they might be combined into the same document.

The Rental Agreement

When a tenant rents a house or apartment, the house's title continues to belong to the landlord. This changes when the tenant decides to use their property-buying option. The beginning of every arrangement is tenancy rather than house purchasing transactions.

In these types of arrangements, the first and main component is the same one you'll find in regular lease agreements. The terms you'll find will include the lease duration, the rent payments and their intervals, and any maintenance and repair responsibilities that fall to either the landlord or the tenant.

The Purchase Option

When your leasing arrangement includes an option to purchase, this means that you have the ability to choose to buy your rental property for a fee. The purchase must be made within a time period specified on the contract.

The purchase fee, also called an option fee, is generally paid up-front to the landlord. Alternatively, the fee might be integrated into the rent in the form of increased payments. Either way, the purchase option will be worked into the basic tenancy proceedings.

If a tenant chooses not to purchase the property, they still aren't entitled to receiving any refunds on their rent or option fee. It's also crucial for the purchase option to cover any relevant terms and conditions, since a great deal is at stake for both involved parties. Typically, the purchase option contract will include the length of the option period along with the house's purchase price.

Who Would Use a Lease to Own Agreement PDF Form?

These agreements are always made between a tenant and a landlord. The tenant pays a fee to the landlord to keep their purchase option open, and leases the property in the meantime.

Tenants who enter these agreements typically intend to purchase a house eventually, but need to work on improving their credit score and financial situation before they can. Unlike a normal house purchase, tenants can move into the property right away. They may spend several years renting before they're ready to make the purchase.

Landlords typically enter the agreement when they're interested in selling the property, but they don't need to do so immediately. The option fee is a definite perk for the landlord, as is the rent money. Another ideal aspect is the fact that the landlord doesn't need to search for a buyer in the real estate market. Their prospective buyer already lives on the property.

When Should a Lease to Own Agreement Be Used?

If a tenant loves a home and wants to purchase it, but they don't have the financing or credit score to get a loan approved, a rent to own option is a good idea. Similarly, if a landlord is interested in selling their property, but they want to continue collecting rent payments rather than putting said property on the market, a rent to own option solves their problems.

Basically, this kind of agreement is best if a tenant intends to purchase the property in the future, but can only afford rental payments at the earlier point in time.

Consequences for Not Using a Lease to Own Agreement Form

If a tenant decides they don't want the ownership consideration, they'll pay their rent without other obligations. During this time period, the landlord would be within their rights to sell the property to another individual or evict the tenant. Tenants who want first consideration in a potential purchase must use this type of agreement.

If a tenant does want to use a lease to own arrangement, it's important that a contract be drawn up in writing. This contract will explain the terms of the agreement, including the option fee. Such a contract is vital for both the landlord and tenant to keep for their financial records.

How to Fill Out a Lease to Own Agreement

When both the basic lease and the ownership option are included on the same form, you'll need to complete the following steps:

• Fill out the name and contact information of both the landlord and tenant. Then fill out the information about the property, including the property's address, any personal property included in the rental agreement, and any structures on the property.


• Take down basic leasing information including your rent, the intervals in which the rent is paid, and any utility bills you're responsible for.


• Record information about the appliances that come with the house, including whether they're part of the purchase price.


• Record information about the responsibilities of both the landlord and tenant. Who is in charge of basic maintenance? What about different property inspections?


• If the option fee was paid through a one-time deposit, record the amount. If it's being added to the rent payments, record the amount added to the rent each month.


• Record the purchase price of the home.


• Record the length of time the tenant has to purchase the home after they begin their tenancy.


• Date the contract and make sure both the landlord and tenant sign.

Quick Questions

What happens to the option deposit if you don't buy the home?

Are there many differences between a standard lease and a lease to own?

Is the purchase price of the house negotiated beforehand?