03/20/2012 (press release: lesrkramskyesq) // Florham Park, NJ, USA // Nancy Maldonado
Les R. Kramsky, Esq., the General Counsel to The Money Store and a Real Estate Attorney, is one of the most widely recognized leaders in the mortgage, title insurance and real estate industries. In the past Mr. Kramsky has served as the General Counsel to large real estate developers, real estate agencies and title insurance companies. In addition, Kramsky has been a partner in private practice for over twenty years specializing in real estate, mortgage banking, finance, compliance, contracts, leases, labor law, corporate law as well as the general practice of law.
As a Real Estate Attorney, Les Kramsky is a recognized authority on mortgages, title insurance and real estate matters and has been quoted in media outlets such as The New York Times, Wall Street Journal, Fox Business News, National Mortgage News, Law360, WCBS Radio, Corporate Counsel Magazine and Secondary Marketing Executive Magazine.
A Rent to Own Agreement is a lease combined with an option to purchase the property within a specified period at an agreed uopn price. Such arrangements have proliferated in the post-crisis market because many potential home buyers can’t meet the tougher loan qualification requirements today, and many potential sellers are unable to realize a satisfactory selling price.
In a recent article published in Fox Business, Mr. Kramsky stated that since the seller can’t market the home to anyone else during the lease period, it’s common for sellers to require a down payment of 1% to 5% of the sale price , called an “option fee.” If, at the end of the lease period, the renter buys the house, the option fee is applied to the down payment. If the renter does not buy the house, the seller keeps the fee.
He also advises sellers aim to sell the house for 5% to 10% more than the current market price to cover any appreciation in the home value.
In addition to that down payment, Kramsky recommends including a rent premium into the monthly rent. For instance, sellers might want to add $300 on a $1,000-a-month rent that would be applied to the purchase or down payment of a house if sold, but kept if the deal falls through.
Sellers can even have the buyer agree to handle all home repairs and maintenance, placing the burden on the renter if anything goes wrong with the house, and alleviates the need for the seller to act as landlord.
While Kramsky says it’s not common from renters to walk away from a rent-to-own deal, it does happen, particularly if they don’t qualify for a mortgage at the end of the lease term. “Maybe they lose their job or maybe they are relocated or were unable to save money. There are many factors,” he says.
In sum, there are definitely situations where Rent to Own Agreements can benefit all parties.