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Old 07-09-2011, 09:22 PM
andix andix is offline
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Rent to own in Canada? How does it work?

I'm not really skilled with money, nor am I business-oriented but I have a house and I'd like to know how does the 'rent to own' system work in Canada. My common sense says I should enter a contract with the tenant / future buyer, but are they bound by the contract to buy at a given date, or can they change their mind?
Any help would be really appreciated. But please stick to Canadian laws if you have this kind of experience, as I have noticed that little legal terms can make a huge difference in a court of law, between Canada and the USA.
Thanks!
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Old 07-10-2011, 07:35 AM
bizerta bizerta is offline
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Quote:
Originally Posted by andix View Post
I'm not really skilled with money, nor am I business-oriented but I have a house and I'd like to know how does the 'rent to own' system work in Canada. My common sense says I should enter a contract with the tenant / future buyer, but are they bound by the contract to buy at a given date, or can they change their mind?
Any help would be really appreciated. But please stick to Canadian laws if you have this kind of experience, as I have noticed that little legal terms can make a huge difference in a court of law, between Canada and the USA.
Thanks!
IANAL - IANAC (I'm not Canadian). There is no hard-and-fast rent-to-own contract. Each contract is different. Whether a buyer (or seller, or both) is obligated to complete the sale at a future date depends on one thing: the contract. The wording of the contract would determine when (or if) a sale did occur and would be subject to the GST or other taxes.
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Old 07-11-2011, 02:13 AM
andix andix is offline
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So there are several incarnations of the rent-to-own contract? Can they be written either with an obligation to buy or without it? I was hoping for some sort of an "industry-standard" type of paper that goes the same everywhere in Canada (or at least province- or territory-specific.)
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Old 07-12-2011, 09:49 AM
md2000 md2000 is offline
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AFAIK there is no standard contracts for "rent to own", here in Canada or anywhere in N. America. The logic is obvious - your rent payments reduce his mortgage principle, so the owner can sell to you at a reduced price.

Exactly what and how the payments apply and what percent apply to the sale price is entirely up to the people making the deal. Obvously, the landlord has a tenant likely committed to eventually buying the place, who likely will take better care of it. It also means the owner might want to put off the recording of capital gains - say, later on once he's retired and has lower income.

The final sale price will be lower or the rent characterized as down payment. Lower price means lower mortgage making it easier for the buyer to qualify. If characterized as a down payment, it may mean the buyer need not pay the CMHC mortgage insurance of several thousand dollars (and may be better able to qualify for a mortgage due to high down payment). However, IIRC, the bank may look more closely if the arrangement is between family members - they may require proof of actual cash paid for down payment.
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Old 07-12-2011, 12:22 PM
andix andix is offline
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No, it doesn't have anything to do with families. I live in a slow real estate area and want to bug out of here... so I am exploring rent to own as a way to secure future buyers for the property if nobody can buy it ATM. Quite a few interested people were looking at renting to own and I want to have my homework done if they show up at my door.
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Old 07-12-2011, 12:33 PM
Annie-Xmas Annie-Xmas is offline
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In the USA,there is "rent to own," where the tenant/buyer agrees to close on the sale in a spcific length of time, and the landlord/seller may agree to hold some of the rent towards the down payment of the purchase price.

There is also "the right of first refusal," where the tenant is made aware of the landlord's intention to sell the property at a future date, and has the right to enter into a contract of sale before the landlord lists the property for sale. The tenant can refuse to purchase it.
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