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The phrase “Rent to Own” is completely blurred and not understood by many. Yet this is an option in the Real Estate sector of the American Economy. You will have to know what it means when you hear it being discussed, or you are faced with the option of accepting it over an outright purchase.

To this end, this a clear need that we look into what it means how it works and if there be, advantages and disadvantages inherent in this option which seemingly is favorable to the low strata of the society. Find out more at kitchen remodeling reston

DEFINITION: This is defined as a type of a legally documented transaction in which immovable or movable but tangible properties such as houses, furniture, motor vehicles, and consumer electronics, home appliances, and other real properties are leased out in exchange for an agreed weekly or monthly rent. It is an agreement that is entered into with the ultimate intention of purchasing that property after the maturity of that agreement. Another name that “Rent-to-Own” is known is “Rental-Purchase”.

HISTORY: Tracing the evolution of this option, you will trace it to the United Kingdom and continental European countries, where it first originated under the hire purchase agreement. One of the first to operate this option in the United Kingdom was Lotus Radio which started its operation in 1933 as a radio rental business. Again, in the United States of America, in order to promote the growth of the Real Estate industry, the dealers in the rent-to-own business established and form an association named The Association of Progressive Rental Organization (APRO) in 1980.

TRANSACTION STRUCTURE: Rental-Purchase or Rent-to-Own is structured in such a way that the agreement that governs its operation is done in a way rent will be paid on a weekly or monthly basis, depending on the equipment or property at stake. Renewal is usually at the end of the period when rent is due. That is, at the end of every week or month, renewal is auctioned as soon as the rent for another period is paid. Termination of the agreement comes to life as soon as the renter fails to make the rental payment and with no further obligation on his side by returning the property to its owner.

In a survey that was carried out in the year 2000 by Federal Trade Commission in the United States of America. It was reported that consumers largely do get in doing Rent-to-Own option because it offers them the ability to obtain merchant which hitherto they are unable to acquire, and as it also does not involve credit check on them, and above all the convenience and flexibility that is characterized by the transaction.


There is now the tendency to look at similarities between outright sale and a lease option. There is a legal controversy over whether the Rent-to-Own option should be treated as a credit sale or a lease. The school of thought that belongs to the industry is taken as a lease and not a sale, whereas, on the other hand, the consumer protection group regards it as credit sale. Despite the advocacy of the consumer protection group, the right way in the year 2011, forty-seven states of the United States of America has passed into law regarding the option as a lease. If this is anything to go by, then it can confidently posit that it is a lease of the agreement. Our decision in taking this stand solely rest on the fact that out of 50 states that made up of American states, 47 passed it into law.


This option is common with the purchase of consumer products at departmental stores or retail outlet. However, it is extending to the real estate of the industry. It also describes specialized real estate agreement. In negotiating the terms of the agreement, it gives the renter the opportunity of living in the apartment while making the weekly or the monthly payment of the agreed rent. The operation of this option is usually prevalent during down turn in the housing sector just as it was experienced in the year 2000 financial down turns in the world economy, particularly in the year 2008.



The rent-to-own option has been much favorable for those that have an imperfect credit score as they are encouraged to opt out for the Rent-to-Own option. Tenant/buyer falls into this category. They are allowed to live in the property while making effort at making good their deficient credit score. However, there is a common complaint that is characteristics of the rent-to-own option agreement is their inability to secure mortgage loan on time to pay for the acquisition of the property.



The flip side of this option is that it is vulnerable for scammers to advantage of the unpreparedness of tenants, due to the flexibility of the open source document. Nevertheless, it is a very good opportunity for the less-privileged to eventually owned property.