A lot of the terms vary, but in general you have a Lease on the property in question, coupled with an Option to turn the contract into a sale.
The Sale Price doesn't change, that's the advantage to the Buyer. The Seller has the advantage of having income from the property during the intervening period between execution of the contract and actual closing, and the Lessor/Buyer living in the property makes it more likely they will want to close when the time comes.
One term that can vary is the relationship between the rent payment and the actual mortgage cost of owning the house. The Seller may and may not get enough rent to cover their own costs. How long the Buyer has to Close can vary also. I've seen six months to two years, but there's no legal reason it can't be longer.
Another is that some or all of the rent might be applied to the purchase price. Half might be applied, none, all.... it has no impact on legality.
The contract may or may not be transferable. If it doesn't say it isn't, it is, and this could be used to "flip" a house that you got a good price for in the contract.
It may or may not be extendable after the initial period. If it doesn't say it is, it is not. Unless it says you can renew it, you have the time the contract says you have to close, no more.
Feel free to email me if you have specific questions about it.
2006-11-27 01:33:27
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answer #1
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answered by open4one 7
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