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The Legal Risks Of Rent-to-buy Real Estate That Can Be Quite Hazardous
Are you finding it extremely difficult to purchase a new home or apartment? From not getting the property of your choice to having financial limitations, a lot of factors can restrict this investment of yours. There comes a point of time in life, when you would just want to move beyond rent, but also committing to a mortgage becomes extremely tricky. For such times, a rent-to-buy property may provide can provide some relief and respite to you. This is also called the lease option agreement, and this agreement gives you the power to purchase a property during a specified period, and just pay the rent every month above market rates. When you finally decide to purchase the property, the portion of rent will be repaid to you by the landlord.
Before considering a lease with option to purchase, you must do two important things: research it heavily to make sure it’s the right choice for you, and consult a real estate attorney to make things smoother. Also, make sure that one of the correct rental lease agreement forms is used between both the parties, and it is legally sanctioned to secure the interest of tenant and landlord equally.
Though this definitely has benefits, here are some legal risks pertaining to this as well.
Loss of property completely
It is evident that during the lease period, the rental property will be owned by the landlord and not by the tenant. Hence, if in any case the landlord loses the property, the tenant also fails to have the right to purchase it anymore. Yes, the bank may give a chance or foreclosure to the tenant to buy the property, but there is no legal surety here.
When the tenant decides to purchase the property, he has to pay the amount that he agreed to when he first signed the rent agreement buy real estate. Now, there are chances that the market could anytime go down especially during the rental period, meaning that the buyer will end up paying more. For more information about getting a free printable lease agreement, please visit this website.
There is no guarantee that the person who signs the rent-to-buy agreement will be able to get approved for the mortgage once he decides to buy the property. If the mortgage is declined, he loses the right top purchase the property and pay a higher rent that is not refundable!
Thus, think before you sign such an agreement!
Carl writes often about legal drafting, rental lease agreement, marital separation agreement and help the people in such needs. You can find his thoughts at free legal contracts blog. Please visit this site to draft a sample Pennsylvania residential lease agreement.
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