20+ Free Rent To Own Contract Templates [MS Word]

free rent to own contracts template

A rent to own contract template is a legal agreement between the owner of the property and the tenant renting the property. Almost all people dream of having their own house. You can realize this dream by entering into a rent to own contract. This is an agreement where you rent a property that you will purchase at a later time.

Elements of a rent to own contract:

A rent to own contract is a traditional lease to own contract. According to this contract, you have the opportunity to buy the rented property after the start of your tenancy. You and your landlord both can get financial benefit from such an agreement. Let us discuss below the two main components of rent to own contracts template;

The Rental Agreement

In the agreement, the property’s title remains with the landlords until the tenant buy the property. This indicates that the start of the agreement is the tenancy not the buy transaction of the home. It means that the underlying agreement in a lease to own home contract is just like a standard lease agreement between two parties.

The Option to Purchase

This element in the agreement provides you an opportunity to purchase the rented property within a particular period of time in exchange for a fee that you would pay upfront. This fee is in the form of a rent amount. Some of the fee would apply to the purchase of the house. If you don’t want to purchase the house, you won’t get a refund of the rent or the option fee. You should also check 15+ Rent Increase Notice Templates.

How a rent to own contract works?

Here are some steps to describe how a rent to own contract works;

Upfront Fees

You have to pay the landlord a one-time upfront fee in this type an agreement which is non-refundable. Paying the upfront fee provides you the option to buy the house at a set date in the near future. For the option, there isn’t any standard rate.

Lease Option vs. Lease Purchase

Bear in mind that there are various rent to own agreements, some of them are more flexible and customer-friendly than others. To purchase the house, the lease option provides you the right, not the obligation when the lease ends. When lease expires and you decide not to purchase the property then you can walk away with no issues.

On the other hand, in the lease-purchase agreement, at the end of the tenancy, you are legally obligated to purchase the home whether you can pay for it or not. In a lease-option contract, you still have the choice to purchase the property. But, you don’t need to get burdened with obligations if you change your mind into buying. You just have to ensure that you don’t get into any legal trouble. Before affixing your signature, it is recommended to review the contract with a qualified real estate lawyer. That way, you will determine your rights and what you’re getting into.

Setting the purchase price

You should ensure that the contract specifies how and when to determine the home’s purchase price before entering into a lease to own contract. In most cases, before signing the contract, both you and the landlord should agree on the purchase price. The price is only identified after the lease ends in most cases. Usually, it depends on the property’s current market price.

Apply rent to the principal

You are paying rent overall the duration of the lease, there is the problem on either part of each payment gets applied to the buy price of the house. Also, for the area, the rent would be a bit higher than the going rate.

Purchasing the property

You’re obligated to purchase the house upon the expiration of the lease with a rent to own home contract. This may cause issues, particularly when you can’t get a mortgage for the house. Therefore, lease option agreements are always preferable as they are more flexible. When the lease ends, if you’re unable or unwilling to purchase the house, you don’t get the risk of getting sued.

The features of rent to own contract:

Let us discuss below the features of rent to own agreement;

Rent Payments

Likewise the standard rent payment in a lease contract, you should also have to pay timely rent payments of the set monthly fees. The rent is significantly higher than the traditional setup in a rent to own form. This is because the percentage of the rent goes into an escrow account.

However, this is part of the deal. It is the responsibility of the landlord to set aside part of the rent. At the end of the rent lease, upon the purchase, the landlord applies this set aside amount to the principle of the house. The landlord also provides it back to you. In such a way, during the rent period, you will build equity in the house.


In this agreement, for the maintenance of the property, you are responsible not the landlord. This is absolutely right as at the end of the day, you will own the home.


Under this agreement, the landlord still owns the property until you get the right of the purchase. You still have to follow the terms of the agreement in case you’re responsible for its maintenance and repairs. This indicates, if the contract explicitly specifies these terms, you don’t have authorize pets or residents. The purchase option will get voided if you breach the terms. You can also lose your option fee.


In conclusion, a rent to own contract template is a common traditional rental contract. It provides buyers the option to purchase a rented home at the end of the lease contract. This contract is beneficial for both the owner of the property and the tenant renting the property. However, it is little complicated than a standard lease agreement.

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.

As you found this post useful...

Follow us on social media!

You Might Also Like