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How to Write a Contract for Rent-to-Own Housing

by Kate Savage

A rent-to-own arrangement is advantageous for an owner who has difficulties finding an outright buyer for a property. The tenant signs a rental lease and an option to purchase the property at a fixed price at the conclusion of the rental period, ranging from one to three years. If you decide to write your own rent-to-own contract for your tenant, you'll need to include specific, essential information and clauses.

Begin the contract by stating the names and roles of all involved parties. Clearly identify who the owner is and who the tenant is. State the full address of the property as well.

Include the dates -- month, day and year -- that the rental period begins and ends, during which the tenant pays the owner a monthly rental amount.

Specify the rental amount that the tenant must pay every month, when the rent is due, and where the tenant should send it. State what portion of each month's rent, called the rent premium, will go toward the down payment on the property at the end of the rental period. Include information on any fees or penalties the tenant will incur if he fails to pay rent on time.

State the amount of the option fee, or deposit, the tenant must pay at the beginning of the rental period. This will become part of the down payment at the end of the rental period if the renter decides to buy. An option fee can range from 1 to 5 percent of the property's sale price.

Stipulate the purchase amount of the property. This amount cannot change over the course of the rental period.

Establish the responsibilities of both the tenant and the owner. Specify who is responsible for upkeep and maintenance, who will pay real estate taxes, what utilities the tenant must pay, whether pets are allowed and any other provisions that apply to your rental arrangement.

Detail any reasons the owner or tenant can terminate the rent-to-own agreement and any penalties either party could incur if they should end the arrangement. Often a tenant will forfeit his deposit and rent premium should he end the arrangement.

Include spaces for all involved parties to sign and date. Add space for each party to add his contact information as well.

About the Author

Kate Savage is a writer and editor with more than eight years experience writing and editing professionally. She holds a master's degree in writing and editing as well as a bachelor's degree in English literature. Her writing has been featured on a number of websites, including eHow, GlobalPost, and SFGate.com. She lives in Portland, Ore.

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