Rent to own, rent to buy or lease options applied
to the property

A rent to buy agreement means:

1. You rent (lease) a property by signing a Residential Tenancy Agreement. This could be a standard Assured Shorthold Tenancy (AST) or a different tenancy agreement depending on your arrangement with the landlord.

2. You pay for the right to buy the property by an agreed date at a fixed price. The amount you pay (separately from the lease payments) is called the Option Fee.

3. You do not have to buy the property. You can change your mind. However, the option fee is not refundable.

4. Once the option fee is paid, the seller MUST sell the property to you at the agreed price in the agreed time if you wish to buy and if the tenancy agreement has been met. This is called exercising the option.  The specific details of the tenancy agreement are covered in the Residential Tenancy Agreement, which is the rental contract between you and the owner of the property. 

The specific details of the option agreement are covered in a separate document. This is the agreement between you and the owner of the property.

The advantages of Rent To Buy:

1. Only the seller’s approval is required at this time- No bank or finance approval is required until you decide you want to get finance to buy the property. This leaves you time to sort out your financial life and arrange the necessary funding.

2. Purchase price will not change. The purchase price is frozen when the agreement is signed and cannot be changed regardless of any change in the value of the property.

3. Short exchange. You don’t need to wait on bank or finance approval.

4. Try Before You Buy. If you are unsure you really want to buy or are unsure that this is the best house or location for you, you can change your mind about buying. You will lose the non refundable option fee, but you haven’t paid out thousands of pounds in Stamp Duty and loan repayments. You also don?t have to deal with the burden of reselling the house with ever increasing legislation such as Energy Efficiency Certificate (EPC) or Home Information Pack (HIP).

5. Buy at your leisure. The purchaser may buy the house at any time during the term of the contract so you can choose the right time based on your personal circumstance.

6. Establish a good credit rating. If you are unable to currently obtain a bank or other housing finance, proof of regular rent and option repayments over several years may help to establish a good credit rating, which may assist securing the necessary finance.

What are the steps to take in order to move into the property and then buy it?

1. Find a landlord/seller with a property that you like. We can help you with this process.
2. Discuss the terms of the tenancy and option with the landlord/seller.  Although it will not be legally binding, it is nevertheless advisable to get a pre agreement in writing to ensure the both parties are clear about what has been discussed.   
3. Appoint a solicitor to handle the exchange and signature of Tenancy agreement and the Option agreement. Your solicitor will deal with the landlord/seller solicitor to ensure that the above agreements are legally binding for both parties.
4. Sign the Deed of Option
5. Sign the Residential Tenancy Agreement
6. Pay the one off option fee and pay the rental deposit. Some landlord-sellers may be flexible and allow the option fee to be paid instalments.
7. View temporary contract for sale and see that it contains the elements agreed in the option agreement. Some will not draw a contract for sale until you write to their solicitor expressing your wish to buy.
8. Complete the periodic payment authority for direct debit of rent and option fee payments from you bank account.
9. Move into the property, look after the property, pay your rent on time when it’s due.
10. At least 3 months prior to the expiry date of the Option, advise the seller that you wish to proceed and buy the property. Seek bank or other financing as required. Arrange for a solicitor to handle the purchase on your behalf.
11. Purchase the property and stop paying rent.

What are the obligations of the person talking out the rent to buy agreements?

The obligations of a person renting a property are set out in the Residential

Tenancy Agreement and include:

1. Paying the rent on time
2. Keeping the house in good condition and repair
3. Remaining in control of the house-ie cannot leave it vacant for more than 30 days
4. If the tenancy agreement is breached, the Option agreement could be terminated and the Option fee forfeited.

The obligations regarding the option to purchase the property are set out in the Option agreement and include:

5. The obligation to pay the Option Fee on time (the Option Fee is fixed for the duration of the agreement and will not be changed)
6. The obligation to advise the seller of the intention to buy the property and to allow sufficient time for all necessary steps (eg arranging a bank loan so that the purchase can be settled on or prior to the expiry date.)

What happens if the rent or Option Fee instalments are not paid?

If the rent or the Option Fee instalments are not paid within 14 days of the due date, the tenant will be in default. If the payments have not been brought up to date by the time the next payment is due, the seller may terminate the Option agreement. The tenancy may be terminated according to the conditions in the Residential Tenancy Agreement. But the tenancy has not lost the house. He?s only lost the right to buy it. This is nothing compared to facing repossession and seeing your home sold at auction.

What happens on termination of the tenancy?

The tenants must vacate the property and leave it in the same state as he found it

What happens to the Option Fee?

All money paid towards the Option Fee is non-recoverable.

Who pays the default costs’?

Any costs and expenses arising from the default are paid by the purchaser, including any expenses incurred by the seller.

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Refinancing in Q309 Saves Borrowers $3bn in 12
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Half of all borrowers that refinanced their conventional loans in Q309 saw their annual mortgage interest rate drop by at least 17%, according to a quarterly report by mortgage giant Freddie Mac (FRE: 1.15 0.00%).Although the new interest rate was only about 1.1 percentage points below the old rate, in aggregate the interest rate reduction [...]

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Why would it take 957 days to sell this 4 bedroom
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The agent?s MLS remarks indicated: Sellers say SELL! Look at this great new price per sqft! This is a wonderful, normal 4bd, 2bath home high above Foothill in a great, quiet neighborhood. Features and upgrades include hardwood floors, copper plumbing, Ca/Fa, fireplace, master suite and more. Show and sell! This home is priced to move!So what was the problem? I showed this home a year or so ago, and quite simply it was not staged and showed poorly. Home sellers take note: A time or monetary investment in staging continues to be less costly than your first price ...

Read The Full Article:
http://los-angeles-real-estate-blog.com/2009/11/03/why-would-it-take-957-days-to-
sell-this-4-bedroom-la-crescenta-home.aspx?ref=rss

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How to Acheive Your Personal and Business Goals
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If something takes 5 minutes a day, but saves countless hours and drastically improves your success would you do it?  100% of you are saying yes right now . . . now I want you to commit one whole year to doing this before you have the chance to back out.  You will be amazed [...]

This Article is Copyright © 2004-2009 BiggerPockets, Inc. All Rights Reserved.

How to Acheive Your Personal and Business Goals in Five Minutes a Day

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Liesmans Calculus

Yesterday, CNBC?s Steve Liesman reported what he termed a potentially ?calculus changing? event for the Friday?s employment situation report.

The latest ISM manufacturing employment index breached 50 indicating expansion in manufacturing employment and, as Steve noted, there have been very few instances where total nonfarm payrolls have declined (on either a month-to-moth or year-over-year comparison basis) during periods where the ISM manufacturing employment index is at or over 50.

This would appear to imply that Friday?s number could come in much stronger than anticipated.

Looking at the following chart, you can see quite clearly that Steve is right in his assertion.

The green vertical bars show instances where the ISM index is over 50 but the nonfarm payroll number declined on a year-over-year basis while the purple vertical bars highlight month-to-month instances.

One thing to note from the chart above though is that since 1985 the ISM?s manufacturing employment index has rarely been above 50 so the overall significance of an ?ISM vs Employment Situation? mashup may be minimal? but still? the employment index appears to be indicating pretty strongly that manufacturing employment is expanding.

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Mortgage Broker Pleads Guilty To Falsifying
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Michael Chou, San Francisco, California, pleaded guilty in federal court to wire fraud conspiracy for his role in a mortgage fraud scheme spanning 6 years.

In pleading guilty, Chou admitted that, in a scheme that began in 2003 and continued until approximately April 30, 2009, he defrauded mortgage lenders and financial institutions by providing false and fraudulent information in support of mortgage loan applications. Working out of an office in San Francisco,
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