Decision day has arrived and you’ve come to the conclusion you’re going to sign a rent-to-own agreement on a home. As of right now, everything about the home and property is a perfect fit for your needs. Plus, you and the seller have agreed upon a monthly rent rate and an eventual purchase price on the home that are tailored to your budget.

Everything seems great for months, even years, until you suddenly realize this home is not for you.

You may have outgrown the house before your lease is up or maybe you’re just not in love with it anymore like you used to be. Now, you’re looking for a way to terminate your rent-to-own agreement so you can move somewhere else that better fits your new needs.

Therefore, the question is now:  can I get out of this rent-to-own agreement as the buyer?

The short answer is you most likely will not be able to get out of the agreement, but there could be some loopholes you can exploit that can allow you to terminate your contract.

Wait Until the End of Your Lease-Option Contract to Walk Away

The easiest way to get out of your rent-to-own agreement is to wait until the lease portion of the deal expires and then walk away. Of course, this is easier said than done and, not to mention, you need to make sure you signed a lease-option rent-to-own agreement and you did not sign a lease-purchase rent-to-own agreement.

What’s the difference between the two types of rent-to-own agreements?

A lease-option version means you have the choice to continue on with the purchase of the home once the lease portion of your agreement ends. If you feel like you don’t want to continue on with the purchase once the lease is over, you can walk away from the home and the deal without any questions asked. Though if you decide to walk away, you’ll lose all the money you’ve sunk into the property including your option fee and all the “extra” rent you paid that was supposed to go towards the down payment of your home.

A lease-purchase version means you’re required to purchase the home once the lease portion of your rent-to-own contract has expired. You cannot back out of a lease-purchase rent-to-own agreement otherwise the seller will sue you and they will win (1). The only way the seller wouldn’t win in this case is if a discovery is made that some stipulation in the contract has made the entire agreement null and void (more on that later). Even if something like that is brought to light and makes it legal for you to get out of the contract, you would still be out the money you had previously spent on the property.

Have a Civil Conversation with the Seller

Honesty is the best policy when it comes to any situation in life. If you realize midway through the lease portion of your rent-to-own agreement that this isn’t the house for you, have a civil conversation about it with your seller. Be honest about your feelings towards the property and explain everything in a calm, cool manner. You can even ask what you can do for the seller to help remedy the situation for both of you.

Depending on your seller’s demeanor and personality, they may be willing to work with you and both your real estate lawyers to find a way to come to a mutual contract termination agreement, especially if you’ve already signed a lease-option contract.

On the flip side, this conversation may make your seller angry and they could refuse to even think about the idea of you backing out on them. It doesn’t hurt to have an open and genuine conversation about the situation though.

If you’re asking to back out of the contract because you’re nearing the end of your lease and you fear you still won’t be able to qualify for a mortgage on the house, let the seller know. There could be a chance you two could come to a mutual agreement to extend the lease portion of the contract by a certain period of time.

It’s important to keep in mind though that your seller is not required to bend rules or make them flexible for you. The seller has the complete right to hold their line in the sand and firmly stick to the rent-to-own contract you both originally signed. Despite what anyone may think, the rent-to-own agreement is still a legal-binding contract.

Hire a Real Estate Lawyer and Look for Contract Loopholes

Another way you could potentially get out of a rent-to-own agreement as a buyer is if you find certain contract loopholes (2). You could read through your entire contract by yourself, but there will more than likely be a ton of legal jargon to decipher. Your best bet is to hire a real estate lawyer to help you find these contract loopholes.

These loopholes can include things like material breaches and contract contingencies. Finding one of these in a lease-purchase rent-to-own contract can really be a huge victory if you’re desperately attempting to get out of the agreement.

Material breaches are essentially when things are contractually promised, but never end up happening. For example, say your seller has contractually promised to replace the siding on the house before the lease portion of the rent-to-own agreement expires, but they’ve failed to complete this task by the time the lease does expire. This can render your entire lease-purchase rent-to-own agreement null and void and now you can completely walk out of the deal without any questions asked; of course, you won’t be able to recoup any of the money you’ve previously sunk into the property though.

Contract contingencies are specific things that need to happen in order to make a contract valid. For example, your lease-purchase rent-to-own agreement needs to explicitly state the purchase portion of the contract is contingent upon something. This something could be you qualifying for a mortgage, the property appraisal coming back in a certain way or even the house’s clean bill of health in a home inspection.

If you don’t qualify for a mortgage, the home appraisal comes back funky or if there are many things found wrong in the home inspection, your lease-purchase rent-to-own contract would then be null and void.

In some cases, some of these material breaches and contract contingencies could be so clearly stated in your rent-to-own agreement that you may not need to dig too far into the legal jargon to find them. In some cases, these breaches and contingencies could be buried in legal jargon. This is why it’s important to hire an experienced real estate lawyer to go through your rent-to-own agreement with a fine-tooth comb so they can spot anything and everything that could possibly give you an out on the contract.

In a perfect world, when you sign a rent-to-own agreement, everything would go swimmingly throughout the lease period and would eventually transition into a wonderful homeownership. But the world is not perfect, so it’s important to know your options as the buyer if you ever find yourself in a position where you need to get out of your rent-to-own agreement.


Additional Resources

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