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How do you go about rent to own on contract?

We have an active Ch 13 bankruptcy, that still has16 months left on it. We are needing to find another place to live, due to some unexpected issues with our relatives, that own the home we are currently in. The house had to have sewer tile replaced, that we were never informed of having to pay half of, when we verbally agreed to move in  here and rent this place, and maybe buy after our bankruptcy is over. The house is too small, and need a little bigger place with a main floor laundry, bath, and Master Bedroom. Plus at garage, and will accept 2 dogs.
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June 04 2012 - Streator
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Answers (5)

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Well, when you don't have anywhere else to go, you're kinda stuck with the family, and end up having no choice but to pay for it. We are pretty honest people, maybe too honest; we are always getting screwed over by the family. Sorry for the expression, but no other way to put it.
 
Thank you again for your information, and input. I guess we will be staying here for awhile longer :(
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June 05 2012
I think you should've left before a major repair. You have a lot tied into this property and figured that it will not work for you.  You can move forward with the sale or just chalk it up as a loss, if you don't want court and bad feelings between you. I wish I could get my renters to pay for major expenses on the idea of future purchase.
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June 05 2012
Profile picture for wetdawgs
Rent to own properties are very rare, but if you can find one be aware that the contracts tend to benefit the seller.     From the way you describe it, the "maybe" of purchase has been discussed with your relative and they are thinking that "maybe" is still outstanding.  It is up to you to make sure there is clarification.

While the theoretical concept of rent with the option to buy may seem attractive, some of the realities are considerably less so.

Owners who will consider rent to own are very rare, so it will cut down your options for properties considerably.   I consider it much smarter to spend a year or two working on improving your credit and (if necessary) saving up a good down payment.   Yeah, it is tough to move but it even tougher to lose a lot of money attempting to buy.

Some features of rent to own:

1.  Down payment required - often substantial (e.g. 10% or  more) and is non-refundable if the potential buyer doesn't purchase.

2.  Monthly rental is above fair market rent, with the only amount going to purchase is the amount above the fair market rent.  This is also not refundable.

3.  If not qualified for financing at the agreed upon  time and price, then you lose everything. 

4.  The price is agreed upon at the beginning of the contract, and housing prices may still be decreasing.

5.  You still depend on the owner to pay their mortgage.   If they fail, you lose.

If you do get involved in this despite the tremendous $$ risks to the buyer,  please involve an attorney in the contract.


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June 05 2012
Profile picture for user1871890
we never signed anything, it is my husband's sister & brother inlaw that own this house, and we agreed to taxes, house payment and homeowners insurance, and that is it. They were helping us out, and we were helping them out by getting this off the market, and taking care of the payments. The house payment, insurance, ext is in their name, not ours. Never did they discuss us having to pay for major expenses while renting this from them. Once our bankruptcy is over, if we "wanted to" we could purchase this, and what we have paid would go towards the equity. But it is too small for us, and since we moved here, my husband works a distance away, and we are wanting to get closer to his job. but paying all that money toward that sewer tile replacement, that had issues before we moved here, put the topping ono the cake.
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June 04 2012
Most rent ot owns benefit the seller , in qualifications. What if your credit was still sub par after discharge? Will you still be forced to buy? What if you did qualify but your interest rate was 19% ? 16 months is a long way. Most lease terms of 1 year or less are verbal and enforceable, anything longer has to have paper attached. Repair sewer tile? What did you sign?  Seek legal advice.
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June 04 2012
 
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How do you go about rent to own on contract?
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June 05 2012 | 5 answers
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