Rent-to-own is a process by which a tenant can rent in the home, for a stipulated time and at the end of that time, You have the right to purchase the property at the price set at the time. Of this price, the amount is discounted (either whole or part) that the tenant has paid monthly.

There are no specific regulations in this contract on the conditions. If allusions are included in the Civil Code and in the article 14 of the Mortgage Regulation, as well as in the Law of Urban Leases.

Minimum contract requirements:

  • The purchase price must be indicated in the contract.
  • The delivery period of the home as a purchase must also be included in the contract.
  • The tenant is who decides whether to make the purchase within that period.
  • Generally a premium is collected. That is to say, an amount contributed by the lessor for the granting of the purchase option. This amount is usually discounted at the time of purchase.

Advantages and disadvantages for the owner

Drawbacks:

  • It can be a waste of time for the owner if he wants to sell it and the tenant finally decides not to buy it.
  • During the term of the contract the property cannot be sold.
  • You cannot change the price of the house that has been set in the contract.

Advantage:

  • You are investing your rent money.
  • It assumes a good insurance of non-payment of rent, for the premium paid at the beginning.
  • You have tax benefits for renting your home.
  • If in the end the tenant decides not to buy the house, keeps what was paid in the premium.

Advantages and disadvantages for the tenant

Drawbacks:

  • You lose the premium paid at the beginning if you decide not to buy the home.
  • If prices drop during the rental period, will not be able to benefit from it.
  • The contract is subject to double taxation by the Property Transfer Tax, for the rent and the option to buy.
  • The lessee has the obligation to pay the tax by ITP within the maximum term 30 days from the signing of the contract.
  • The purchase option will be subject to the Property Transfer Tax.

Advantage

  • Part of what is paid for the rent, plus the premium is deducted from the total price of the house.
  • The purchase is insured.
  • You can buy the home at any time of the rental.