Rent to Own Agreement
A Rent to Own Agreement is a lease agreement that also give the renter the option to purchase the property after some period of time. It is a good option if the renter cannot afford to purchase the property immediately or if the seller cannot find a buyer immediately.
RENT TO OWN AGREEMENT
This Agreement (the "Agreement") is dated for reference as of [Enter Date of signing] by and between:
[Enter Name and Address of Landlord] (the "Landlord"),
[Enter Name and Address of Tenant] ( the "Tenant"),
(collectively “the Parties”)
The Landlord is the owner of the property located at [Enter Address of Property] [Enter Parcel Number/APN] (hereinafter referred to as "the Property")
The Landlord wishes to lease the Property and the Tenant wishes to lease the property from the Landlord;
The Landlord wishes to grant the Tenant an option to purchase the Property upon satisfactory performance under this Agreement.
THEREFORE in consideration of the Property, mutual covenants and agreements herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged the Landlord agrees to lease the Property to the Tenant, and the Tenant agrees to lease the property from the Landlord for use as a private residence on the following terms and conditions:
1. TERM AND TERMINATION
1.1 The term of this Agreement shall commence on [Enter Date Tenancy to Commence] (“Effective Date”) and shall terminate (“End Date”) on either:
[Enter Date Tenancy to End]; or
pursuant to the provisions of the Option to Purchase .
1.2 The Option to Purchase shall terminate on the End Date if not exercised by the Tenant pursuant to clause 4 of this Agreement.
1.3 If the Property become totally or partially destroyed during the term of this Agreement so that Tenant’s use is seriously impaired, either the Landlord or the Tenant may terminate this Agreement immediately.
1.4 Tenant shall be given possession of the Property on the Effective Date.
1.5 Following End Date the Tenant shall vacate the Property unless otherwise agreed subsequently by the Landlord and Tenant either (a) in writing, (b) by acceptance of rent following the termination date by the Landlord, or (c) by operation of local law. (d) where the Tenant exercises the Option to Purchase. All other terms and conditions of this Agreement shall remain in full force and effect.
2.1 Tenant shall pay to Landlord rental payments of $[Enter Amount] (“Rental Payment”) for each calendar month, payable in advance on the [Enter day e.g. 1st/15th or last] day of each calendar month (“Due Date”)
2.2 Rental Payment shall be made to Landlord at the above noted Landlord’s address which may be altered by notice to the Tenant by the Landlord from time to time.
2.3 Rental Payment shall be made by cash / check / money order (delete as appropriate) payable to the Landlord.
3. SECURITY DEPOSIT
3.1 Upon execution of this Agreement Tenant shall pay to Landlord, a security deposit of $[Enter Amount] (“Security Deposit”) to be held on trust and applied where appropriate to remedy:
damages to the Property, other than normal wear and tear,
any unpaid rent;
key replacement costs; or
any other defaults under this Agreement
3.2 Any amount of the Security deposit not applied pursuant to Clause 3.1 shall be returned to the Tenant within [Enter Number of Days] days after the End Date subject to any further agreement made in relation to the Option to Purchase.
3.3 The Tenant shall be entitled on request to receive a written accounting of any amount of the Security Deposit applied pursuant to Clause 3.1 and the same shall be provided to the Tenant by the Landlord within [Enter Number of Days] of such request.
3.4 Where the amount of the Security Deposit is insufficient to remedy damages or defaults under this Agreement the Tenant shall immediately pay on demand any reasonable additional costs for damages to Landlord.
4. OPTION TO PURCHASE
4.1 Upon satisfactory performance of the Tenant’s obligations under this Agreement the Landlord grants to the Tenant an exclusive and non-assignable option to purchase (“Option to Purchase”) the Property for a purchase price of $[Enter agreed purchase price](“Price”).
4.2 The Tenant shall pay a non refundable consideration in the amount of $[Enter amount] (“Option Consideration”) for the grant of the Option to Purchase. Where the Tenant exercises the Option to Purchase pursuant to the remainder of this clause 4, the Landlord shall reduce the Price by the amount of the Option Consideration. For the avoidance of doubt the Tenant agrees that the Option Consideration shall not be refundable at the End Date where the Option to Purchase is not exercised by the Tenant.
4.3 Where the Tenant wishes to exercise the Option to Purchase, the Tenant must deliver to the Landlord, a written notice (“Option Notice”) of Tenants intent to purchase, not less than [Enter number of days] prior to the End Date. The Option Notice should express:
the Tenant’s wish to exercise the Option to Purchase at the Price;
a note of any Agent acting for the Tenant pursuant to the purchase; and
a proposed Closing Date for the purchase such Closing Date to be before the End Date.
4.4 Where the Option to Purchase is exercised, the Landlord agrees to deliver title to the Property and the Tenant agrees to accept title to the Property and pay the Price subject only to:
a lien for taxes and assessments levied against the Property;
any covenants, conditions, restrictions, easements, right, rights-of-way of record; and
such other exceptions as Landlord and Tenant approve in writing.
Following receipt of the Option Notice the Landlord and Tenant shall negotiate and execute a Sale and Purchase Agreement in relation to the Property.
4.5 The Landlord shall reduce the Price by the amount of $[Enter amount] for each and every Rental Payment made by the Tenant up to and including the Closing Date.
4.6 Tenant agrees that any costs or fees of any third party including but not limited to lenders and attorneys in respect of the Closing of the sale and purchase of the Property shall be the sole responsibility of the Tenant. OR The Tenant and Landlord shall bear their own costs in relation to the sale and purchase of the Property.
4.7 The Parties acknowledge that the Tenant may not be able to obtain the requisite finance to purchase the Property and the Tenant makes no representation that it will obtain finance to allow it to exercise the Option to Purchase. The failure to obtain financing to purchase the Property shall not be deemed to be a condition in respect of this Option to Purchase.
4.8 The continuing validity of the Option to Purchase granted in this Agreement shall be wholly dependant upon the Tenant observing its other obligations under this Agreement. Where the Tenant is in breach of any its obligations under this Agreement the Landlord shall have the right to terminate this Agreement in its entirety upon giving [Enter days] days written notice to the Tenant to allow the Tenant to remedy such breach. Where such breach is not remedied by the expiration of the notice period the Landlord shall terminate this Agreement and the Tenant shall forfeit any and all sums paid under this Agreement, other than any returnable Security Deposit.
5. LATE PAYMENTS
4.1 Subject to applicable law, where a Rental Payment is not paid within [Enter Number of Days] days after the Due Date, Tenant shall pay a late fee equal to [Enter Percentage]% per annum of the required Rental Payment, calculated on a daily basis.
6.1 Tenant agrees to pay all utilities and/or services in respect of the Property during the term of this Agreement except the following which shall be paid by the Landlord:
7. FURNISHINGS AND PROPERTY CONDITION.
7.1 The furnishings and appliances outlined on the attached Inventory shall be provided by the Landlord.
7.2 The Tenant and Landlord acknowledge and agree that they have inspected the Property prior to the Effective Date and have agreed on the condition of the property and any existing damages as at the Effective Date as reflected in any attached Condition of Property document.
7.3 Tenant shall return the Property and all such items outlined on the Inventory at the End Date in a condition as good as existed at the Effective Date, normal wear and tear excepted. It is agreed that all dirt, holes, tears, burns, and stains of any size or amount in the carpets, drapes, walls, fixtures, and/or any other part of the Property, do not constitute reasonable wear and tear.
8. USE OF PROPERTY AND OCCUPANCY.
8.1 Tenant shall occupy and use the Property only as a full-time residential dwelling, and not for any other commercial, retail or professional use, other than where prior consent is provided in writing by the Landlord. The provision of such consent shall be at the sole and unfettered discretion of the Landlord
8.2 If Tenant intends to be absent from the property for more than [Enter number of days] days then Tenant must inform the Landlord of such absence.
8.3 The following persons are entitled to occupy the property:
Enter Name of Person 1
Enter Name of Person 2
Enter Name of Person 3
8.4 Tenant may only have any individual guest on the Property for [Enter number of days] consecutive days/days in a calendar year (delete as applicable), other than where prior consent is provided in writing by the Landlord. The provision of such consent shall be at the sole and unfettered discretion of the Landlord. Guests staying longer than this time shall not be considered Tenants.
9.1 Other than where provided for elsewhere in this Clause 7, no animals including but not limited to dogs, cats, birds or fish (“Pets”) shall be permitted on the Property either as a resident animal or temporarily with a guest other than where prior consent is provided in writing by the Landlord. The provision of such consent shall be at the sole and unfettered discretion of the Landlord and such consent shall be revocable on [Enter days] days notice provided by the Landlord to the Tenant.
9.2 Tenant is permitted to have the following Pets on the Property:
[Enter description of Pet]
[Enter description of Pet]
9.3 In respect of the Pets mentioned under Clause 7.2, upon execution of this Agreement Tenant shall pay to Landlord, an additional security deposit of $[Enter Amount] (“Pet Deposit”) to be held on trust and applied where appropriate to remedy any damages or other defaults under this Agreement in relation to Pets.
10.1 Tenant is hereby assigned or permitted to park only in the following area or space:
[Enter Description of Space] (“Parking Space”)
10.2 The parking fee for this space is $[Enter Amount] monthly and shall payable on the same terms of the Rental Payment.
10.3 Parking Space shall be kept clean at all times. Vehicles leaking oil, gas, or other motor vehicle fluids shall not be parked on the Property. Mechanical work or storage of inoperable vehicles is not permitted in Parking Space or elsewhere on the Property.
11. CONDUCT AND TENANT OBLIGATIONS
11.1 The Tenant or any guest must not disturb or harass any other occupant of the Property or the Landlord or any neighbour. The Landlord may notify the Tenant or the Tenant’s guest of any noise or behaviour which in the reasonable opinion of the Landlord may disturb the comfort of other occupants or neighbours, particularly between the hours of 10.00 p.m. and 8.00 a.m. The Tenant and any guests shall cease such noise or behaviour, which must not continue to be repeated then or in the future.
11.2 Tenant must not engage in illegal drug use, sale, manufacture, distribution or other criminal or immoral activity in or around the Property.
11.3 Smoking is not permitted on the Property at any time including on balconies, public areas or common ground. .
11.4 Garbage must be sealed and placed in the designated bins. Large items shall not be placed in bins. Tenant is responsible for disposal of large items such as furniture or carpets. All hazardous materials, electronics and computer waste shall be disposed of at a designated recycling centre.
11.5 Tenant must maintain reasonable health, cleanliness and sanitary standards throughout the Property and the other common areas to which the Tenant has access including but not limited to taking reasonable care of any drains that may be subject to overflow.
11.6 Tenant must comply with all other rules and regulations notified to them by the Landlord in an addendum to this Agreement or in writing from time to time.
11.7 The Tenant is not authorized to make any repairs without the consent of the Landlord. The Tenant may not paint the Property, change locks or attach anything to walls, ceilings or the external parts of the building that may require corrective action or repair.
11.8 Tenant shall not keep or have on the Property any article or thing of a dangerous, flammable, or explosive character that might substantially increase the danger of fire on the Property.
11.9 Tenant shall promptly comply with all laws, ordinances, requirements and regulations of the federal, state, county, municipal and other authorities, and the fire insurance underwriters.
12. LANDLORD’S OBLIGATIONS
12.1 Landlord shall have the responsibility to maintain the Property in reasonably good repair at all times and perform all repairs reasonably necessary to satisfy any implied warranty of habitability.
12.2 All maintenance and repair requests must be made in writing and delivered to Landlord.
12. RIGHT OF ACCESS
12.1 The Landlord may inspect the Property in accordance with the terms of this Agreement.
12.2 The Landlord may enter the rental unit only if one of the following applies:
(a) At least [Enter number of hours] hours and not more than [Enter number of days] days before the entry, the Landlord gives the Tenant a written and or verbal notice which states:
The purpose for entering, which must reasonable
The date and the time of the entry, which must be between 8 a.m. and 9 p.m. unless the Tenant agrees otherwise;
(b) There is an emergency and the entry is necessary to protect life or Property;
(c) The Tenant gives the Landlord permission to enter at the time of entry or not more than 30 days before the entry,
(d) The Tenant has abandoned the Property;
13. PROPERTY INSURANCE.
13.1 Tenant acknowledges that Landlord’s property insurance does not cover personal items of the Tenant kept in the Property and Tenant shall each be responsible to maintain appropriate insurance for its respective interest in personal effects kept on the Property.
14.1 ENTIRE AGREEMENT. The provisions herein contained constitute the entire agreement between the parties hereto and supersede all previous communication, representations, expectations, understandings and agreements whether verbal or written between the parties or their respective representatives with respect to the subject matter of this Agreement and shall not be modified or amended except by written agreement signed by the parties to be bound thereby except where provided otherwise in this Agreement..
14.2 ASSIGNMENT. Tenant agrees not to transfer, assign or sublet the Property or Option to Purchase or any part thereof. The Landlord may assign the lease but only with the consent of the Tenant.
14.3 NO WAIVER. No provision of this Agreement shall be amended, altered or waived except by a further written agreement, signed by each of the parties hereto. No waiver of any provision hereof shall operate as a waiver of any other provision or as a waiver of the same provision on any other occasion.
14.4 SEVERABILITY. Should any part of this Agreement be declared or held invalid for any reason, that invalidity shall not affect the validity of the remainder which shall continue in force and effect and be construed as if this Agreement had been executed without the invalid portion and it is hereby declared the intention of the parties hereto that this Agreement would have been executed without reference to any portion which may, for any reason, be hereafter declared or held invalid.
14.6 SUBORDINATION OF LEASE. This Agreement is subordinate to any mortgage that now exists, or may be given later by Landlord, with respect to the Property.
14.7 JOINTLY AND SEVERALLY: Where the Tenant is more than one individual each individual is jointly and severally responsible and liable for all obligations under this Agreement.
14.8 TIME OF ESSENCE. Time shall be of the essence of this Agreement.
14.9 GOVERNING LAW. The provisions of this Agreement shall be governed by and interpreted in accordance with the laws of the county of [Enter County] and the State of California.
The Parties have executed this Agreement on the date first written above.
DISCLOSURE OF INFORMATION ON LEAD-BASED PAINT
OR LEAD-BASED PAINT HAZARDS
Lead Warning Statement
Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Before renting pre-1978 housing, landlords must disclose the presence of known lead-based paint and/or lead-based paint hazards in the dwelling. Tenants must also receive a federally approved pamphlet on poisoning prevention.
(a) Presence of lead-based paint and/or lead-based paint hazards [Check (i) or (ii) below]:
(i) _____ Known lead-based paint and/or lead-based paint hazards are present in the housing as follows [Enter know hazards below]
(ii) ____ Landlord has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.
(b) Records and reports available to the landlord [Check (i) or (ii) below]:
(i) _____ Landlord has provided the Tenant with all available records and reports pertaining to lead-based paint and/or lead-based paint hazards in the housing [list documents below]:
(ii)____ Landlord has no reports or records pertaining to lead-based paint and/or lead-based paint hazards in the housing.
Tenant's Acknowledgment (initial)
(c) _____ Tenant has received copies of all information listed above.
(d) _____ Tenant has received the pamphlet Protect Your Family From Lead In Your Home.
Certification of Accuracy
The following parties have reviewed the information above and certify, to the best of their knowledge, that the information they have provided is true and accurate.
This form has been prepared for general informational purposes only. It does not constitute legal advice, advertising, a solicitation, or tax advice. Transmission of this form and the information contained herein is not intended to create, and receipt thereof does not constitute formation of, an attorney-client relationship. You should not rely upon this document or information for any purpose without seeking legal advice from an appropriately licensed attorney, including without limitation to review and provide advice on the terms of this form, the appropriate approvals required in connection with the transactions contemplated by this form, and any securities law and other legal issues contemplated by this form or the transactions contemplated by this form.