If you want to rent to own in Chicago, there are a few things you will need to include in your contract. Take a look at a few of the things we suggest you include in our post below. Always have your contract reviewed by a lawyer before signing! The most important thing is to make sure you are protected!
Using a rent to own contract in Chicago is a great way for renters to finally become homeowners. When the agreement is set up properly, there are a number of benefits for both parties. As the buyer, you’ll be able to secure your dream home, while having time to get your down payment together or your credit in order. The seller will, in turn, be able to generate income from the property via your rent payment, while finding a buyer in a market where they may have been struggling to close a traditional sale.
When a buyer finds a property they want that is able to be acquired via a rent to own agreement, they’ll want to make sure there is an iron-clad agreement put in place. This is a big transaction with a lot on the line. The place you will call home isn’t something you should go into lightly. Below are just a few of the things to include in your rent to own contract.
Terms of the Lease
The terms of the lease need to be outlined in detail. How long will the lease last? Many rent to own agreements last for 2 to 3 years. But if you still aren’t able to qualify for a loan, will an extension be available? When is the rent due and is there a penalty for late payments? There are a lot of questions that can arise when using a rent to own agreement to buy a house in Chicago. Make sure the agreement you are using is as comprehensive as possible to avoid any discrepancies.
When using a rent to own contract to buy a house in Chicago, you’ll want to make sure that all the money you’re spending is really going somewhere. You will likely be paying an increased amount in rent. In many contracts, a percentage of your rent payment will go toward the down payment on the home. A great perk for buyers is the ability to lock in the purchase price. What the property is being sold for today is what the buyer will pay when the lease term is up. Make sure the financial details of the agreement are clearly outlined so their aren’t any disagreement or confusion about who pays what and what money goes where.
Repairs & Maintenance
It’s important to be very clear about who is responsible for what, especially when it comes to repairs and maintenance. In many agreements, routine maintenance and small repairs will become the responsibility of the tenant. Whereas if something major goes wrong with the home, it will come back to the homeowner. An expensive part of being a homeowner is handling all of the repairs and maintenance. In fact, some sources recommend setting aside 1-3% of the home’s purchase price for maintenance expenses each year. Take this in to account when setting your budget and thinking about what you can afford. Repairs can become an area of contention between a buyer and seller, so you should be as detailed as possible in this part of your agreement.
If something major does go wrong with the home, or if you discover something that wasn’t disclosed when the deal was made, you don’t want to find yourself stuck buying the property. Most traditional offers include contingencies to cover in case of damage or a low appraisal. A rent to own agreement should be no different. Be sure to include contingencies in the contract, allowing you to walk away from the agreement if you need to.
Of course, you don’t want to default on the terms of your lease, but you should know what to expect if you do. While you should expect a penalty or forfeiture of funds, make sure the penalty is fair and not too severe. A lot can change during your lease-term and if you decide not to buy, you don’t want to have to worry about being hit with any hefty fines or fees. Some agreements require to purchase at the end of the lease term while others simply give you the option. Know which type of agreement you are signing before making the deal!
For many homeowners, using a rent to own agreement in Chicago will help them fulfill their dream of becoming a homeowner. The agreement can be beneficial to both the buyer and seller when set up correctly.