If you’ve bought a home and moved from the past one and can not market it, you might be saddled with two mortgages. 1 option in off-loading the home is a transaction. Depending upon the up-front agreement, you could recoup the previous mortgage, charge substantial extra monies and require the buyer/renter to cover certain repairs and maintenance. As a vendor in a rent-to-own transaction, however, you must fulfill certain responsibilities, including the stipulations agreed to in the up-front contract.
Rent-to-Own Contract
A rent-to-own transaction relies on the assumption that a seller devotes the home to a buyer for a set amount in a set time period. Certain monies from the rent are applied toward the home’s purchase. At an agreed-upon future date, the tenant outright buys the home from the vendor.
Real Estate Taxes
Regardless of the way the up-front agreement is negotiated, the individual whose title is on the deed to the home is responsible for paying taxes on the property. They could be paid from the surplus monies over the mortgage payment that the owner receives from your rent-to-own buyer.
Homeowners Insurance
Since the tenant doesn’t yet own the property, the duty of purchasing homeowners insurance falls upon the seller. Even though the tenant may buy renter’s insurance to cover contents and personal property, the proprietor is responsible for insuring the dwelling and related buildings.
Major Repairs and Routine Maintenance
In the event the seller agreed to cover major repairs and regular maintenance, then the vendor must perform or cover these throughout the lifetime of the deal with the tenant. In the event the roof becomes leaky or the air conditioning goes out, the vendor must ensure that the repairs have been completed within a timeframe agreed upon in the contract together with the tenant or what is required by law.
Real Estate Agent
Sometimes, sellers will enlist the assistance of a real estate agent to locate a renter/buyer. If that is the case, then the owner is liable for paying the real estate agent the agreed-upon fee or commission. Depending upon the agreement with the broker, this might be compensated through either a portion of the rent received from the tenant or an outright payment.
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