Purchase And Sale Agreement - Real Estate Websites: Fill & Download for Free

In the real estate investing business, rent to own – also known as a lease option or lease to own agreement – is an option that gives potential buyers the opportunity to purchase the real estate property later, based on a signed contract between them and the sellers.Basically, the answer to what is rent to own is: it is a binding agreement between the real estate property owner (seller) and the tenant (buyer) in which the buyer is allowed to keep renting the real estate investment property for a set time period (usually 1-3 years) before actually purchasing the property and claiming ownership.Upon signing the contract, the seller can’t place the real estate property back on the market for sale during the set time period and agrees to sell the investment property to the tenant when the duration of the contract expires.Note: Some rent to own contracts give potential buyers the right – not the obligation – to purchase the real estate investment property at the end of the lease. However, if the wording is “lease-purchase” without the word “option”, then the tenant could be legally obligated to buy the investment property when the lease expires.How Rent to Own WorksThe process is not as simple as tenants paying rent for a set time period and then buying the investment property. Certain terms and conditions must be met, in accordance with the signed contract. The following are the key aspects of what is rent to own:Option MoneyIn a rent to own agreement, the potential tenant pays the real estate property owner a one-time (usually non-refundable) lease option fee called option money. This fee gives the tenant the opportunity to purchase the property in the future. There is no standard rate for the size of the option money, and it can be negotiable. Typically, it ranges between 2.5% and 7% of the real estate property’s purchase price.In some (but not all) rent to own contracts, all or some of the option money is considered a portion of the purchase price when closing the real estate investing transaction. In this case, if a home has a purchase price of $200,000, for example, and a 7% option consideration, the buyer would only need to pay $14,000 up front, which is a lot less than the $40,000 (the size of the standard 20% down payment) he/she’d have to pay in a traditional purchase.Purchase PriceThe contract specifies when and how the purchase price of the real estate property will be determined. In some cases, the buyer and the property owner agree on the purchase price when signing the contract. In other situations, the buyer and the property owner agree to determine the purchase price after the lease ends, based on the fair market value at that point in time. Many potential buyers prefer to “lock in” the purchase price if possible, particularly in real estate markets where investment properties prices are increasing.RentDuring the terms and conditions of the rent to own agreement, the potential buyer/tenant pays the real estate property owner a specified amount of monthly rent. In some cases, a portion of each monthly rent payment (called a rent credit) is applied to the purchase price. For instance, assume the contract states that the tenant will pay $1,200 monthly rent, and 25% of that will be credited to the purchase price. If the time period of the lease option is three years, then the tenant will earn $10,800 rent credit to apply toward the purchase price ($1,200 x 0.25 = $300 per month; $300 x 36 months = $10,800).Oftentimes, this makes the monthly rent payments slightly higher than with regular rental properties. For the buyer, rent payments act as down payments on the real estate property. As for the property owner, they act as compensation for taking the real estate investment property off the market.MaintenanceDepending on the contract’s conditions, the tenant may be responsible for maintaining the property and paying for any repairs, property taxes, and insurance. However, the seller may choose to cover taxes and insurance costs as he/she is still the owner of the real estate property and is thus ultimately responsible for these costs.Real estate investors need to ensure that maintenance and repair requirements are detailed in the agreement. Maintaining the property such as mowing the lawn, raking the leaves, and cleaning out the gutters is very different from replacing a damaged roof, for example.Purchasing the PropertyIf the tenant or potential buyer decides not to purchase the investment property (or is still unable to secure financing) at the end of the lease, the option expires. The tenant loses the option money and any rent credit earned at that point. Moreover, if the tenant/buyer is obliged to but can’t purchase the real estate investment property, the property owner may initiate legal actions.On the other hand, if the buyer wants to purchase the property, typically he/she applies for financing (a mortgage) and pays the seller in full. As mentioned earlier, a portion of the option money and rent payments may be deducted from the purchase price. Thus, the transaction is completed at the closing, and the buyer becomes the owner of the real estate property.Where Can I Find Rent to Own Homes?If you’re looking to find rent to own homes anywhere in the US, head over to Rentown.net – a website dedicated to this strategy and everything related to it.

In short, real estate wholesaling is the process of finding a real estate property, negotiating a deal with the seller, signing a contract to purchase the investment property at a discount, and then finding a buyer who is willing to buy that investment property at a slightly higher price.To pull off a successful wholesale deal, the price under which you sign the initial contract with the seller to purchase the investment property has to be below the fair market value, and the price at which you sign the contract to the actual buyer has to be slightly higher, and the final value of the property post renovation should be high enough for the buyer to make a profit from selling it after doing the necessary repairs.The profit you make as a wholesaler will be the difference in price between what you’ve negotiated with the seller and what the buyer is willing to pay for the property.The first step you will need to make towards wholesaling a real estate investment property is finding potential properties to wholesale. The best investment properties for wholesaling are distressed properties. This is because distressed properties are typically put up for sale at a much lower price than the market’s average due to their need for renovation and repairs.To locate distressed properties for wholesaling in your area, there are a number of mediums that you can rely on.Real Estate Wholesale Groups and Real Estate Investment GroupsOnline Sources and Wholesaling WebsitesHire a property finderOnce you’ve located a potential investment property that is appropriate for real estate wholesaling, it is time for you to approach the seller and negotiate the deal. This is a very important step in any real estate wholesaling deal, as this is the point at which you negotiate the price with the seller and determine the amount of profit that you can make from the deal.When approaching the seller, make sure to be professional about it and do your best to earn his/her trust. It is typically best to leave out the details of your deal, or more specifically the fact that you are wholesaling, as most homeowners will shy away from getting involved with a wholesaler and would rather deal with a normal buyer instead.When negotiating the deal and making an offer, make sure to give the seller a good reason to sell and remind him/her of the benefits of selling the distressed property. Most homeowners who are selling a distressed property will be in a tough financial situation, and in many cases, they might have a debt that they are unable to pay. These reasons will make them more motivated to sell the property, and if you want to make a profit from the deal, you need to take advantage of that.One of the best ways to convince a seller to sell the distressed property at a low price is by pointing out the condition of the property and the estimated costs of repairing and renovating it. Another thing that you can do is to remind the seller that he/she won’t have to pay any upfront costs and that all of the costs and expenses of repairing and renovating the distressed property will be handled by the buyer.After negotiating the deal and coming to an agreement with the seller, it is time to hire a team of real estate professionals whom you will need. There are three major real estate professionals whom you will need to hire at this point: a title company, an appraiser, and a contractor.Real Estate Wholesaling: Finding a BuyerThe best buyers when doing real estate wholesaling are not homebuyers but real estate investors. Real estate investors are most interested in opportunities where they can make a guaranteed profit if they have the finances to do so.A wholesale deal is an especially attractive investment for real estate investors because it can be made in a short period of time and is guaranteed to make a profit. For real estate investors, they don’t even have to gather the information and conduct an extensive research to determine the value of the property and the profit that they can make from investing in it. The wholesaler will be doing all of that for them. All they have to do is to close the deal and fix the property before selling it again for a profit.One of the best ways of finding interested buyers is through advertising the property through online sources such as Craigslist or Zillow. Alternatively, you can advertise the investment property by distributing flyers or by creating a solid emailing list with potential buyers from your real estate network.Real Estate Wholesaling: Negotiating the DealAfter you’ve found a real estate investor who is a potential buyer, it is time to negotiate the deal. This negotiation is extremely crucial for you as a real estate wholesaler as it will determine the exact amount of profit that you will make from the deal. When negotiating the deal with the buyer, you will be using the contractor’s and the appraiser’s estimates to your advantage.Be transparent with the buyer and provide him/her with all the data that you’ve gathered on the investment property so far. This will build up trust and assure the real estate investor of the profits that he/she can make from purchasing the property.When negotiating the price, make sure to keep in mind the various expenses when calculating the profit that you will be making. These expenses include:Appraisal feesTitle feesContractor’s walk through feesMarketing and bird-dogging feesA typical successful real estate wholesaling deal should generate no less than $2,000 after calculating out all of the expenses; otherwise, it would be considered unworthy of the time and effort spent.Real Estate Wholesaling: Closing the DealClosing the deal will typically take place at the title company’s office. Keep in mind that the date of the settlement or closing will be determined in the initial contract that you’ve signed with the homeowner, as well as the contract that you’ve signed with the real estate investor. This date is typically fixed, and you will need to have carried out all of the previous steps before this date.

The Real Estate(Regulation and Development) Bill 2016 was passed by both the houses of the Parliament.Highlights of the Real Estate law are –Registration mandate (For Promoters and Real Estate Agents)The Law mandates that all residential projects, with some exceptions, be registered would be registered with the Regulatory Authority.Promoters shall not book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project, or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this ActRegistration is not required for projects that: a) are less than 1000 square metres, or b) where the promoter has received all requisite approvals and the commencement certificate for the development of the real estate project prior to commencement of this Act c) for the purpose of renovation or repair or re-development which does not involve re-allotment and marketing of the real estate projectIn order to register, the promoter must provide details enumerated in the law to the Authority. If the applicant doesnot hear back from the Authority within 15 days of the application forregistration, the project will be considered deemed registered.The Authority shall provide a registration number, including a Login Id and password to the applicant (Promoter) for accessing the website of the Authority and to create his web page and to fill therein the details of the proposed projectReal Estate Agents must now register with the Authority in order to facilitate transfer of property that is registered. Every real estate agent who is registered as per the provisions of this Act or the rules and regulations made thereunder, shall be granted a registration number by the Authority, which shall be quoted by the real estate agent in every sale facilitated by him under the Act.Duties of the Promoter –70% of the amount collected for the project from buyers must be used only for construction of that project and must be kept in a separate bank account. Also, the deposit of 70% is for both construction cost and land cost, and if the land cost has already been incurred the promoter can withdraw to that extent. This provision has been provided to ensure that project funds are not diverted and projects are completed on time.The promoter shall, upon receiving his Login Id and password from the authority, upload the details of the project online.Promoter shall be responsible for making available to the buyer, site and layout plans of the project, the schedule of completion of the project and other documents enumerated in the law.A promoter shall not accept a sum more than ten per cent. of the cost of the apartment, plot, or building, as the case may be as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person. The proposed project shall be developed and completed by the promoter in accordance with the plans and structural designs and specifications as approved by the competent authorities.In case a buyer incurs a loss because of false advertising, and wishes to withdraw from the project, the promoter must return the amount collected, with interest.Rights and duties of the Allottees –The allottee shall be entitled to obtain the information relating to site and layout plans along with the specifications, approved by the competent authority from the PromoterThe allottee shall be entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation and electricity.The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building, as the case may be, to the allottee by the promoter.TheReal Estate Regulatory Authority (RERA)All states and union territories (UTs)must establish state level regulatory authorities, called Real Estate Regulatory Authorities (RERAs) within one year of the Act coming into force.Two or more states or UTs may set up a common RERA. A state or UT may also establish more than one RERA. The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal.Functions of a RERA include: (a)ensuring that residential projects are registered, and their details uploaded on the RERA website, (b) ensuring that buyers, sellers, and agents comply with obligations under the Act, and (c) advising the government on matters related to the development of real estate.RERA shall consist of a Chairperson and not less than two whole-time Members to be appointed by the appropriate Government.The Central government may also constitute a Central Advisory Council for the implementation of the Act, to determine questions of policy, to foster the growth and development of the real estate sector, to protect consumer interest among other things.The government shall also establish,within a period of one year from the date of coming into force of this Act, a Real Estate Appellate Tribunal, for hearing appeal of any person aggrieved by the decision of the RERA.Offenses and Penalties –In case the promoter fails to register the property, he may be penalised up to 10% of the estimated cost of the project.Failure to register despite orders issued by the RERA will lead to imprisonment for up to three years, and/or an additional fine of 10% of the estimated cost of the project.The promoter will have to pay up to 5%of the estimate cost of the project if he violates any other provisions of the Act.Real estate agents will have to pay a fine of Rs 10,000 for violating any provisions of the Act, for each day the violation continues.Thus, the Real Estate bills aims to provide a comprehensive framework that will regulate the real estate sector and bring about transparency as well as customer satisfaction.Now comes the juicy part -Parliament's jurisdiction to pass this law -There are various state laws governing the real estate sector throughout India. In the state of Maharashtra, ‘Maharashtra Housing (Regulation and Development) Act, 2012’governs real estate sector.Contentions have been made that the Parliament cannot pass a law governing Real Estate because under Entry 18 of the State List (7th schedule of the Constitution of India), only states can make laws related to land, or rights in or over land; land improvement; and colonization of land.However, the scope of this Act is limited to contracts between buyers and promoters, and transfer of property. Both these items fall within the Concurrent List and therefore,Parliament has the right to pass this law.Does this law repeal the state laws?Section 77 and 78 of the Real Estate Act make it clear that the provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.It further states that wherea State has enacted a law for regulation of the real estate sector, and suchState law is not inconsistent with this Act, then, the State Government, tothat extent, may not apply the provisions of this Act in the StateTherefore, only incases where the state law is inconsistent with the provisions of this law, thislaw will be made applicable and the state law’s provision will be inapplicable.This Act will supersede the provisions of state laws.Inconsistency between state and union laws under the Constitution of India -Interesting questions arise when a state law has been passed with President's assent instead of the Governor's. In such a case, which law prevails? The Real Estate law in the state of Maharashtra has President's assent.Article 254 (2) of the Constitution of India states –Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter,then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent,prevail in that State:Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending,varying or repealing the law so made by the Legislature of the State.Thus the Proviso of the article makes it clear that the Parliament shall have the power to add, amend, vary or repeal a state law.CaseLaws -1.M Karunanidhi V. Union of India (1)In this case, the SC held -“Where, however,a law made by the State Legislature on a subject covered by the Concurrent List is inconsistent with and repugnant to a previous law made by Parliament, then such a law can be protected by obtaining the assent of the President under Article 254 (2) of the Constitution. The result of obtaining the assent of the President would be that so far as the state act is concerned, it will prevail in the State and overrule the provisions of the central act in their applicability to the State only. Such a state of affairs will exist only until Parliament may at anytime make a law adding to, or amending, varying or repealing the law made by the State Legislature under the proviso to Article 254"2.Grand Kakatiya Sheraton ... vs Srinivasa Resorts Ltd. & Ors (2)In this case, the Sc held that where the President’s assent is sought for a state law under Article 254 (2), the assent ought to be examined with reference to that exact inconsistency therein and would be applicable only in context to that.“The impugned judgment is a complete answer to the question raised regarding Article 254 (2). There can be no doubt that both the Central Act and the impugned State act operate in the same field in as much as, the "service compensation" is nothing, but the "gratuity", though called by different name. Under such circumstances, unless it was shown that while obtaining the Presidential assent for the State Act the conflict between the two Acts was specifically brought to the notice of the President, before obtaining the same, the State could not have used the escape route provided by Article 254 (2) of the Constitution. We fully agree with the High Court when the High Court held that the two Acts occupy the common field and were in conflict with each other.The contention of the appellant that Article 254 (2) would save the impugned provisions is, therefore, rejected.”Thus, in the state of Maharashtra too, the Union law will prevail wherever there are inconsistencies.I laud the Modi government for bringing this one.For more of my answers and posts on Indian laws, follow - Blawgniti(1) 1979 AIR 898, 1979 SCR (3) 254(2) (2009) 5 SCC 342, AIR 2009 SC 2337