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By Type (2)
There are two types of Lease-Purchase Agreements:
- Option to Purchase: The tenant can choose to buy the property at any time during the lease period.
- Lease-Purchase: The tenant must buy the property by the end of the lease period, usually at a predetermined price.
By State
Rent-to-Own Process Steps
Negotiate the Rental Terms
Landlord and tenant must agree on the following:
- Monthly Rent Amount
- Lease Term (Start and End Dates)
- Security Deposit (if any)
- Utilities and Services
The Option to Purchase Terms
After finalizing rental terms, decide:
- Purchase Price
- Downpayment
- Option Term
- Option Fee (if any)
The lease-purchase terms often include a condition that both parties agree to enter a purchase agreement in “good faith.”
Screen the Tenant
- Screen the tenant with a credit, background, and criminal checks using services like MySmartMove.com or RentPrep.com.
- Check for sex offender status (nsopw.gov)
Verify Tenant Income
The tenant provides:
- Bank Statements (last 2-3 months)
- Pay Stubs (last 2 weeks)
- Tax Returns (last 2 years)
- Employment Verification
Sign the Lease with Purchase Option
Both parties sign the agreement. Tenant provides:
- First Month’s Rent
- Security Deposit
- Prorated Rent (if applicable)
- Additional Fees (pet fees)
Tenant Moves In
Tenant moves in per the lease start date, introduces themselves to neighbors, and follows property rules.
Activate Purchase Option
Tenant informs the landlord of their intent to buy, often with an earnest money deposit.
Enter a Purchase Agreement
Parties agree on:
- Financing Contingency
- Inspection Periods
- Repair Negotiations
- Property Survey
- Closing Date
Include Required Disclosures
Seller provides disclosures about property defects and includes the Lead-Based Paint Disclosure (if built before 1978).
Close the Sale
Closing the sale includes the following:
- Making sure the Buyer funds are available, transfers payment, and receives the deed.
- The deed is recorded at the county office, officially transferring ownership.