Rent To Own

[RichD]

Does any one have any experience with rent to own? I have a house in NB and have been approached buy a couple who would like to Rent to own it. How does rent to own work?  How do you know that they will buy it after the predetermined time? Is there a legally binding way of wording an agreement? Any insight would be appreciated.  Thanks

[ErnestBidder]

   I have not, but your lawyer should be able to set it up. My understanding is that they pay a larger than normal rent until a deposit has built up. If it were me, and I was not sure about having my backside well covered, I'd take a lein, right from the start, on anything of value that was owned by both/either of the spouses. and/or see if any family members would be willing to co-sign. If the prospective purchasers kick up a fuss about approaching such members, remember that they were not shy about approaching you. Also make sure that they buy insurance that covers you and cannot be cancelled.

[Rob]

I'm not familiar with laws in New Brunswick but In general terms, It would depend on the structure of the contract you setup.  I would set a predetermined period of time say 10 years and calculate what the rent would be + (((prime interest + (?)) * rent) / 100).  Put in certain clauses like missing two payments within a set of months will break the contract.   You will need to be responsible for the upkeep of the home during this renting period.  Is that something you are comfortable with?  Usually a renter can decide to pull out of the agreement and you would keep the money paid towards rent and the situation legally would be viewed as that.

[RichD]

Thanks Rob & Ernest Bidder,

Every bit helps.

[gap]

It's actually called Lease to Own.   They don't actually own it until the end of the term, but the tenants pay a downpayment (small) and then more than the monthly amount of market rent to be mortgageable at the end of whatever term you agree to...at the end if they don't want it, all that extra money is yours...AND, your house is well taken care of during the 'rental' period - as they treat it like their own.
If you want further info, you can email me admin@canadianfinancialfreedom.com.   We are an investment club and educators for real estate investment...you can get info from our website or be in contact with someone to get more help for free!

[RichD]

Thanks gap.