In times of recession - imagination
One of the most interesting commercial strategies to sell dwellings during the periods, when the demand for real estates decreases, is that one of the rent of dwelling with the right to acquire it. The real estate agents and the developers use to resort to such kind of lease contract instead of keeping the property inactive. This way the agencies that decide to launch this formula let their clients rent the dwelling for a reasonably moderate price, (between 500 and 800 euros) depending on the property and, after a certain period from 2 to 5 years the client is entitled to decide to purchase it. The main advantage is that the sale price is reduced by the amount that the tenant has paid throughout the rental period. I mean, all those rents paid are considered part of the purchase price.
This option of mixed financing is suitable for people who can not afford buying a property due to its high price, since they do not have enough money to pay a deposit or can not obtain a mortgage loan from the bank ( very frequent in these current times!)
And this is especially interesting during the periods of insecurity in the real estate market or financial uncertainty, when the interest rate increase is unpredictable, and banks are restricting mortgage loans.
This solution can be also found attractive by the landlords or the real estate investors who want to sell their properties. They can save money on the mortgage during the rent period and increase their future chances of selling the property. It is easier to find tenants giving them a purchase option than to find simple tenants. There is always a possibility to renew the lease contract with or without purchase option as well as to look for a possible buyer in a climate of more financial stability.
If you want to include the purchase option in the lease contract you can use the clause below as a model:
Eighteenth. – The Purchase Option.
The parties agree that before the term of the present contract, FIVE YEARS, comes to an end, the tenant should be able to acquire the property of the real estate – object of this lease. To purchase the property, the tenant must formally inform the landlord about it within the last month before the date of expiration.
In case of possible purchase the sale price of the dwelling would be of ONE HUNDRED AND TWENTY THOUSAND (120.000) EUROS. Rental payments are not included in this price.
The sale of the real estate would be formalized by a public deed, free of charges. And the payment of the whole agreed price must be done in the moment of the contract signature. Expenses and taxes originated by the sale would meet the requirements of the Civil Code.
Any of the parties shall be able to register this lease purchase contract in the Property Book Office. The cost of the registration would be paid by the party who promotes it.
Of course, I would advise you to have a Lawyer revising the legal aspects of the transaction.
By Maria L. de Castro
web@costaluzlawyers.es
www.costaluzlawyers.es