What to Expect as a Tenant Buyer


Being a tenant buyer is different than being a renter.  With a lease-purchase (rent-to-own) agreement you’re both a tenant and the future owner of the home.  It is sort of like a bridge between renting and homeownership.

In a rent-to-own there are two stages and two agreements.  You have a rental / lease period followed by the purchase period; and a standard lease agreement coupled with a separate "Option to Buy" agreement.  This means you have the legal right to buy the property at a future date.  Once you are ready complete the purchase, you will "exercise the option" with the standard purchase process that results in full ownership by you.

As it is with a standard lease, you will be expected to make payments on time, follow the rules and keep the property up, all in conformance with Landlord Tenant laws.  At the beginning for the right to buy in the future, you will pay a non-refundable option deposit.  This deposit will fully apply to the Purchase Price as downpayment when you buy, but is forfeited if you do not buy the house.  If you don’t there can be the standard financial consequences, along with possible nullification of the Option to Buy Agreement.

Your obligation is to be a good tenant, but you’re also held to a higher standard that you would be held to as the owner of the property.  You’re expected take greater pride in the property and have greater responsibilities towards it.  While usually the mortgage, taxes, and large repairs are covered by the seller during the option period, you as the buyer are responsible for the maintenance and upkeep of your new home, just as you would be if you bought it outright.

Renting to own gives you the future opportunity of homeownership while grooming you for the responsibilities that come with it.  So if you expect to be able to  buy the property in the future, but cannot swing it at this very moment, then a lease-purchase may be right for you!