Repairs and Improvements – States what is considered a repair or an
improvement, who is responsible for paying for these expenses, and whose
property they become after the lease.
Additional Services – defines who is responsible for services such as, snow
removal, lawn service, pest control, etc.
Insurance – Includes what type of insurance coverage is required of the lessee
and the lessor along with coverage amounts, deductibles and limitations. During
this time period you may want to purchase renter’s insurance to protect your
contents. In addition you may want to make certain that the lessor is responsible
to provide homeowner’s insurance to protect your future equity. Although you
have no interest in the property at the time your Accumulated Monthly Rental
Credit could be considered an asset.
Transfers – States whether your or the lessor’s rights under the lease are
transferable under the terms of the agreement. May also state if you have the
ability to sub-lease the property.
Early Termination – Provides terms in the event of an early termination of the
agreement by either party due to normal or unforeseen circumstances.
Untenantable Premises – What occurs if the home becomes uninhabitable due
to fire, flood, casualty, or other natural disaster.
Security Deposit – Defines if a security deposit is to be charged, the amount of
the deposit, how the deposit is to be held (escrow), and the conditions for deposit
return.
Binding Effect – States who the agreement is binding upon such as agents,
executors, assigns, and successors.
Renewal – Whether the lease term is renewable and the terms of renewal. There may be other terms and provisions to your lease agreement depending on
State Law, local ordinances etc. In the final analysis the terms of your agreement
are up to you and the landlord/seller.
The Option To Purchase
The Option To Purchase can be integrated in the lease agreement or exist as a stand alone document. In general the buyer is more protected with separate agreements. Some state have even mandated this structure. When the lease agreement contains the Option to Purchase the seller has more protections.
In any event as a buyer you should protect yourself against the event of a lease termination causing you to lose your option to buy AND your option payment. As is the case with any legal document it is advisable for the buyer and the seller to both have rent to own agreements reviewed by an attorney before they sign them.
