Buying or Selling a Home/Lease-To-Own-Property
Good Morning,I have a rental property with the same tenants for two years. I am interested in selling this property to the tenant.What process is involved with leasing to own a property? Thanks for any advise.
First of all, Chris, if you are not a real estate agent or have extensive real estate knowledge, I strongly recommend you sit down with a REAL ESTATE attorney and put together what you are trying to accomplish. This is why:
When you lease to own, both lessor and tenant, both parties must abide by rather sensitive clauses in these agreements. The fact, however, that you have had that tenant for two years is encouraging. Chances of the tenant reneging is less.
You would need three documents. First an OPTION TO PURCHASE. Because that is what you are giving the tenant. You are giving him an option to buy the property and as long as he abides by its terms, you then create a RESIDENTIAL PURCHASE AGREEMENT. Meanwhile, the tenant executes a RESIDENTIAL LEASE AGREEMENT. The option stipulates how much of the monthly rent you are crediting as part of the the tenant's down payment. And also, what happens to these credits should he not abide by the option and/or does not actually purchase the property. Plus how much, if any, painting, repair and maintenance, etc. will be be allowed to do and is he going to be credited with the cost of such?
The tenant, through the lease agreement and option actually has an interest in the property, and he could take you to court, whether it's warranted or not, should there be a dispute from any and all credits, rents and down payments he paid even without him closing an escrow on the purchase. Also, up to how much time is the tenant granted before he is to close the sale and take title?
Now do you see why I opened this reply the way I did, Chris? Since a lease-to-own benefits mostly the tenant/buyer, I recommend you have the tenant pay for the attorney's time and work, at least pay for half of it. If he doesn't have the money to pay the attorney fees, you could pay it and he then would have an obligation to you when the sale actually closes. More than anything, you must abide by Texas law as long as the house is indeed in Texas, Chris, and you want this lease-to-own to go down without any headaches. I am saving you some sleep time in the future with these words. I do wish you well.