Lease with purchase option is a form of access to housing that can have benefits for both the owner and the tenant of the property.
For the tenant the amount paid monthly as rent is deducted from the final purchase price, so it is no longer considered a “wasted money”, but an investment and a way to save over the term of the lease up to have the necessary amount to be able to access a mortgage loan (in case the bank only grants a financing of 70 or 80% of appraisal of the property).
For the owner there are also advantages such as ensuring payment of a monthly amount, plus the payment of a deposit to secure the purchase by the tenant and keep occupied the house with consequent profitability.
What is a lease agreement with purchase option?
It is a double contract, consisting of a lease (which lists all the conditions relating to the rental of the house) and an option purchase (where the conditions for the purchase of housing are fixed too).
The tenant may reside in the dwelling during the stipulated period (normally one to three years, coinciding with the term of duration contemplated in the Law of Urban Leases).
And after this period, the tenant will have the right to buy the property at the agreed price, from which the rent (all or part) paid until such time will be deducted from the final prize.
Normally the tenant agrees to pay the owner an initial premium, usually a percentage of the sell-purchase prize, to ensure the purchase of housing. If finally the tenant decides not to buy the premium is lost.
It is highly recommended that in the contract all the conditions of both the lease and the purchase are very clearly reflected.
Regarding the lease is necessary to detail:
- Term or duration of the rental.
- Monthly rental income and who hasto bear with the expenses of the homeowners (ordinary and / or extraordinary) and payment of Local Property Tax (IBI). If the house is not purchased the rents paid are lost.
- Whether or notthe tenant can carry out reforms / works in the house.
- Term during which the tenant can exercise his right of purchase.
- Whether if delays or defaults occur the optionto purchase will be
The sales contract must specify:
- Final price of the sale.
- Percentage to discount (partial or total) of the rental paid from the sale price.
- Initial payment (deposit to secure the purchase) that has to be paid by the tenant to the seller (and where appropriate to discountto the final price of the sale).
- The contract can be registered in the Property Registry to be enforceable by third parties.
This kind of leasing is a good solution for those who expect to buy a home in the medium term, pending of an economic improvement or greater facilities to obtain a mortgage loan.