Rent To Own
Your Rent To Own Lease
Typically there are two parts to your agreement, the Lease and the Option To Purchase. Your lease defines the terms and conditions of renting your home during the first phase of your Rent To Own process. The terms of your lease should include the following:
In Nova Scotia the lease is required to comply with the Residential Tenancies Act (N.S.R.S.1989.c.401) The Nova Scotia Standard Form of Lease satisifies all these requirements
- Lease Term – the length of time your agreement will be in effect. Designating a beginning and ending date.
- Rental Rate – The amount of your monthly lease payment.
- Late Fee - An amount to be charged to the renter in the event that the rent is not paid in a timely fashion. This section can also define a late fee date such as ten days after the rent is due.
- Use Of Premises – Explains the acceptable and unacceptable use of the property by the lessee.
- Maintenance - Defines what types of repairs are maintenance items and who is responsible for paying those expenses.
- Repairs and Improvements – States what is considered a repair or an improvement, who is responsible for paying for these expenses, and whose property they become after the lease.
- Additional Services – defines who is responsible for services such as, snow removal, lawn service, pest control, etc.
- Insurance – Includes what type of insurance coverage is required of the lessee and the lessor along with coverage amounts, deductibles and limitations. During this time period you may want to purchase renter’s insurance to protect your contents. In addition you may want to make certain that the lessor is responsible to provide homeowner’s insurance to protect your future equity. Although you have no interest in the property at the time your Option Credit could be considered an asset.
- Transfers – States whether your or the lessor’s rights under the lease are transferable under the terms of the agreement. May also state if you have the ability to sub-lease the property.
- Early Termination – Provides terms in the event of an early termination of the agreement by either party due to normal or unforeseen circumstances.
- Untenantable Premises – What occurs if the home becomes uninhabitable due to fire, flood, casualty, or other natural disaster.
- Security Deposit – Defines if a security deposit is to be charged, the amount of the deposit, how the deposit is to be held (escrow), and the conditions for deposit return.
- Binding Effect – States who the agreement is binding upon such as agents, executors, assigns, and successors.
- Renewal – Whether the lease term is renewable and the terms of renewal.
There may be other terms and provisions to your lease agreement depending on
Provincial Law, local ordinances etc. In the final analysis the terms of your agreement
are up to you and the landlord/seller.
The Option To Purchase & Contract of Sale
The Option To Purchase may be a part of your lease agreement, part of the Contract of Sale, or a separate
agreement entirely. The following common provisions may apply.
- Option Term - The time period when the Option to purchase is in effect.
- Notice – The notice of intention to exercise the option and how it may be delivered to the seller.
- Option Consideration – The amount and acknowledgement of receipt of consideration for the Option To Purchase.
- Purchase Price – The price for which the property will be sold to the buyer.
- Exclusivity – States that the option is exclusive to the option holder (buyer) and assignment conditions if any.
- Closing and Settlement – Defines provisions such as selection of Title Company, closing costs, fees, settlement costs and responsibility for payment of expenses of closing.
- Financing Ability and Disclaimer – States that there is no guarantee by either that financing will be available at the time the option is exercised.
- Remedies Upon Default - States what will occur if the tenant/buyer defaults on the Option Agreement.
- Commissions – If any real estate or other commissions are payable at the point the option is exercised.
- Recording – Defines if the contract may be publicly recorded, who may dictate if the agreement may be recorded and who must be notified in the event of recording.
- Modification And Extension - Terms under which the agreement may be modified if the agreement may be extended and the conditions under which extension can occur.
The Option to Purchase & Contract of Sale drafted as either a separate documents, or together, are contracts with all obligations provisions and conditions of any Real Estate Sale.
Dockrey Apartments has the contract drafted by their Solicitor, and draft copies given to the lessee/purchaser for examination and approval by the lessee/purchaser's solicitor or legal advisor prior to signing.
Dockrey Apartments advises that all prospective lessee/purchasers retain skilled counsel to examine all contract documents