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Monday, January 28, 2008 4:11 PM

What does ?renting with an option to buy? mean?

It?s tough to sock away funds toward a down payment when you?re laying out rent every month. No wonder rent-to-buy arrangements seem like a sweet deal.

How They Work: These agreements allow you to pay rent monthly on your apartment or house, with some or all of your payments being used to defray the cost of eventually buying it. Usually you?ll have a contract at the outset specifying how long you can rent and what portion of your payments count toward the down payment.

The Pitfalls: The apartment or house may carry a higher price tag than if you had bought it on the open market. That?s because the seller is getting the money in dribs and drabs, not all at one time. Also, at some point, you?ll still need to get a regular mortgage to complete the deal.

Tip: These transactions can be complicated, so find a buyer?s agent with experience in lease-to-buy deals. She?ll walk you through the process and protect your interests.

-- Betsy Wiesendanger

Posted by Nest Caitlin
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Comments

re: What does ?renting with an option to buy? mean?

There are varying laws in every state of course, so I can only give you a perspective from Georgia. We are a non-judicial foreclosure state, and there are others as well with similar procedures for defaulted mortgage loans. This is very important when determining whether a Lease Purchase as we call it is right for you.

Because the courts are not involved in foreclosures it is relatively easy to go through the whole process in a few months. Since the Lessee does not actually own title to the property it is not very difficult for the Lessor (owner) to continue to collect payments from the tenant while not making mortgage payments at the same time. This type of criminal behavior has occurred many times in the Atlanta market and it has been a very sad and sometimes tragic day when I have arrived at someone's door to post the foreclosure and voluntary eviction notice. The occupants are often totally unaware that the property has been foreclosed on and often this happens shortly after they have made their timely payment to the owner. Since the Lessee is not in default on the Security deed they have no recourse to prevent theforeclosure and must vacate before the couty auction occurs.

With that very real possibility in mind, you should know  with 110% certainty that you can trust the person(s) who you make a Lease Purchase agreement with......at least here in Georgia.

Posted by malanoza    Saturday, February 02, 2008 8:58 AM


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