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Old 10-12-2008, 06:56 PM
 
1 posts, read 2,716 times
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I am in a serious financial situation. I work in Prescott and live in Cottonwood. I really need to relocate as it is costing too much money to commute. I am in a rent to own property and want to terminate the option to buy end of the contract. I am not planning to terminate the rental portion of the contract as I know I am obligated to at least honor that portion of the contract. I would like to just pay the rental amount and set aside the purchase amount. How can this be accomplished?
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Old 10-12-2008, 10:22 PM
 
Location: Prescott Valley, AZ
1,929 posts, read 5,920,274 times
Reputation: 1496
Default Breaking a Lease-Purchase Agreement

Quote:
Originally Posted by dachsyrn View Post
I am in a serious financial situation. I work in Prescott and live in Cottonwood. I really need to relocate as it is costing too much money to commute. I am in a rent to own property and want to terminate the option to buy end of the contract. I am not planning to terminate the rental portion of the contract as I know I am obligated to at least honor that portion of the contract. I would like to just pay the rental amount and set aside the purchase amount. How can this be accomplished?
Read the terms of your contract to see what contractual obligations you have. Next, contact the current owner and discuss the situation. Presumably, you gave the owner some down-payment money and then you pay rent each month. A portion of the rent money applies towards your purchase if you exercise your option to purchase the property at the end of the lease period. In reality, VERY FEW lease-purchase agreements end up with the renter purchasing the property. The owner should have known this from the beginning.

You will most likely lose your down payment and you will lose any money that was going to be applied to the principle if you exercised the option. In other words, any money that you have paid to the seller so far is probably the seller's money. That is the nature of lease-purchase agreements. You agree to give a non-refundable deposit and rent. The seller agrees to hold the property for you to buy and allows you to live in the property. If you decide not to purchase the property, then that is your choice, but you lose whatever money you invested in the property.

You can talk to the seller and the seller may agree to cancel the contract so that you can move or the seller may agree to let you stay and pay rent. However, you will likely pay more money in rent then you did as a lease-purchase. In a lease-purchase, the seller will typically allow you to pay less than market rent, because he has an incentive to do so - namely your purchase of the house in the future. If you are just going to pay rent, then the seller will want a fair market rent. Should you both agree to terminate the existing contract, then you should do so in writing and then execute a new rental agreement (in writing) for now and into the future.

Note: The above text is for informational purposes only and is not intended as legal advice. Consult an independant legal counsel for legal advice.
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