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The word doing all the work in her rent to own contract is "timely"

A friend's daughter is renting a house with an option to buy it and she asked me to look at the paperwork, mostly because I'm the person in her life who reads things. Eleven pages, one staple, lease and option jammed into the same document.

Rent is 1,900. The paperwork says 300 a month goes toward the purchase and the price is fixed at 289,000 for three years. She'd been in there fourteen months and had 4,200 in her head as money already banked.

Page nine says the credit accrues only on rent received timely, and defines timely as on or before the first. Not a grace period, the first. She'd paid on the fourth twice, once because the bank held a deposit. So by the plain words on the page she had 3,600, and the landlord's position was that it was zero because another clause said any default voids all accrued credits.

What got me was she'd never read page nine. She read the number 300 in the email and the price and stopped. The landlord isn't a villain either, I think he downloaded the form and never priced what he was giving away.

They're talking now. She's asking for a separate option agreement and a written statement of the credit balance every January. She got that idea from her mother's insurance guy, not from anyone in real estate, which tells you something.

9 replies

Page nine. It's always the page nobody prints. The bit that gets me is the credit balance existing only in the landlord's head until somebody asks for it in writing.

Around here the rent to own signs are on the worst houses in town and the credit is usually 100 a month on a place that needs a roof. Your friend's daughter got a comparatively serious version of this and it still had a trapdoor.

The default-voids-everything clause is the one I'd fight. Two payments on the fourth over fourteen months and the whole accrual disappears? That is a big consequence for a bank holding a deposit. Whether it actually holds up depends on your state and on a lawyer reading it, which is a sentence I say a lot.

I'm planning a first purchase and I have been treating rent-to-own as a thing that happens to other people. Reading this I think I'd want the option as its own signed document, dated the same day, so the two things can't be collapsed into each other. Is that actually how careful people do it or am I inventing a comfort blanket?

@quill from everything I've read that separation is exactly the standard advice, keep the lease a lease and the option an option. I don't fully understand why yet, something about what happens if one of them gets terminated.

Any agreement where one side keeps the ledger will eventually have a fight about the ledger. I learned that over five years of running a service business. Landlord probably wasn't scheming. He just never made the spreadsheet.