Sometimes clients are interested in a Rent to Buy option, as opposed to an outright purchase. This may be because they do not have the funds to purchase the property at that moment, or need to wait for some reason. And the seller is willing to agree a rental contract with an option to buy, so they know they have a buyer. This can have advantages as a purchase for both parties.
Like any purchase, it is important that the solicitor acting for the purchasers/tenants makes the usual checks before any money is paid. Then a contract would be prepared. This would be a rental contract with an option to buy or “contrato de arrendamiento con opción de compra”. The owner would state that they are the owner (which would be checked) and that the property is free of charges and up to date with payments. Also that they are willing to let to the tenant/s the property as a rental with a monthly payment, with an option to buy.
The contract would contain various clauses regarding who pays utilities and costs of the property, what happens if there is rent is not paid etc. In our case study that I am referring to now it was agreed that the tenants would pay a sum of 12,000€ shortly after signing the contract, a rental payment of 500€per month, and they had a year to exercise the option to buy the property.
The price was included in the contract and is held. All rent paid up to when the option is exercised is deducted from the final price to be paid. In our agreement in this, all the costs of the purchase were be paid by the buyers. With exception of the plusvalía (town hall tax) which was paid by the vendor.
Thus initially the purchase worked very much like a rental but before the year was up the purchasers reverted to us to execute the option to buy. During the previous year they had been living in the property and were like tenants. Once they executed the option to buy it became very much like a usual purchase.
At the point of executing the option we would need the up to date paperwork such as deeds, last suma or IBI, recent electric and water bills, community details, and copies of all the payments paid towards the
purchase. In this case, the purchasers were securing a mortgage and we dealt with the Bank to liase regarding everything. We organised the Notary
date for completion of the purchase and attended with the clients and bank (but could have acted with power of attorney). So the tenants then became proud new owners of their property.