How does a lease with a purchase option work?


What is rent with the option to buy?

The rent with the option to purchase allows the tenant to live in a house paying monthly installments, as in a regular rent, but after a period of time established in advance, the tenant has the right to choose to buy the house. 

This type of contract has advantages for the tenant since when buying the house the total of the monthly payments paid or part of them will be deducted from the price set in the contract. 

The rental fee is not much higher than for a regular rental contract, but the initial outlay will be somewhat higher since the tenant must pay a premium. This will depend on the selling price. Payment of this premium can sometimes take the place of a deposit. If the tenant vacates the property, he will forfeit the money. As a result, the property owner ensures that the tenant is interested in the acquisition.

What is the lease contract with the option to buy?

The rent with the option to purchase is a type of double or mixed contract, in which clauses of both the rental model and the purchase-sale model are included. This contract model does not appear in the Civil Code, but it is accepted and contemplated in the Mortgage Regulation and in the Urban Leasing Law (LAU).

The contract must necessarily include the object of the contract and the established price. In addition, it must contain formalities taking into account the rent and the sale separately.

 Regarding the lease, it must be stated:

Period of time in which the tenant can rent the house.

Period of time in which the tenant can exercise his right to purchase.

The amount that the tenant must pay monthly.

Who is in charge of the community expenses, repairs, or reforms of the house?

Regarding the part of the sale, the contract will include:

Intention to sell of the owner of the home, if the tenant shows interest.

The sale price of the house.

Percentage of the installments paid during the rental period that will be deducted from the price of the house.

The property owner assures that the tenant is interested in the acquisition in this manner.

What guarantees does the rent with the option to buy have?

For the tenant:

He has the right to live rented in the house for the stipulated time, even if he finally decides not to buy the house. That is, the owner cannot rent it to third parties during that period of time.

He can purchase the home at any time within the set deadlines.

Within the specified time frame, you have exclusive rights to purchase the residence.

He can see the house before buying it and know if it really suits his needs.

For the proprietor:

The selling of the residence provides you with security. He receives the entire price agreed upon in the deal if he does not sell it.

He has lived in the house until it is sold, and he is paid on a monthly basis.

During the duration of the contract, he has tax advantages.

He is confident that the tenant would look after the property because it may become his future residence.

Keep in mind that in this type of contract the sale price does not vary, which can be an advantage or a drawback, since it may be above or below the market. What can change are the monthly rental payments, which can be altered according to the IPC (Consumer Price Index).

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