Real Estate Rental With Option to Buy

Summary

    – Principle of the real estate lease with purchase option

    – Who can benefit from a real estate lease with a purchase option?

    – Lease to own: advantages

Renting a property with an option to buy is a specific type of purchase: you rent the property before becoming its owner. 

Principle of the real estate rental with option to buy

The real estate rental with the option to buy, also called renting-accession or leasing, is a renting for which the tenant can buy the housing before the end of the lease. It is commonly used for social housing. It applies to premises used for residential purposes or premises used for residential and professional goals.

There is another variant of real estate lease with the option to buy; this one is adapted to your professional activity. It most often takes the form of a real estate lease. This contract concerns completed and built buildings, buildings to be constructed or in the course of construction, buildings in sale in the future state of completion. It concerns the following goods: trade, professional premises, warehouse, workshops, offices.

The purchase price is fixed upon signature of the contract, in which it is specified that the tenant may purchase the property. The future purchaser has the status of a tenant for the entire duration of the lease, the bank (for assets financed on credit) remaining the owner of the property during this same period, then becoming the owner at the end of the lease if he expresses the will to exercise the purchase option. The owner cannot oppose the sale of the property to the tenant who expresses the will.

Who can benefit from a real estate lease with an option to purchase?

The real estate rental with the option to buy is intended for all people who wish to buy a property. However, it is particularly interesting for future buyers who do not have the possibility of obtaining a real estate loan under good conditions:

    – young workers;

    – people with low purchasing power;

    – people who have just been divorced, etc.

Real estate leasing is for any entrepreneur who wants to finance his investment. This situation allows any professional to become the owner of the rented property to exercise his professional activity without requiring a significant down payment at the beginning (the banks often require a substantial personal contribution within the framework of a traditional real estate credit).

Real estate rental with purchase option: advantages

The real estate rental with the option to buy offers many advantages to the future buyers who opt for this solution:

    – it allows access to the property without having to take out a real estate loan when the contract is signed;

    – it gives the future buyer the time they need to wait for enough money to exercise the option, but the time frame for the option is undetermined on the day of the signing of the lease-purchase agreement;

    – it allows the buyer to build up capital gradually throughout the term of the lease;

    – it allows the sale price of a property to be locked in at the time of signing the lease, which is particularly interesting if prices rise sharply during the term of the lease;

    – the lessee can think about whether or not to buy the property, which allows him to change his mind, especially if his situation has changed (professional transfer, expansion of his family, housing that has become too small, etc.), and this formula presents flexibility adapted to increasing mobility;

    – the lessee can transfer his lease to another lessee according to the contractual agreements he has signed with the leasing company; 

    – during the entire duration of the lease, the owner is liable for the property tax and any co-ownership charges, including significant works on the property.

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How Do You Negotiate Real Estate Purchase