Ask an Expert: Some advice on rent-to-own apartments
Q. What should I keep in mind when considering a rent-to-own apartment?
A. The first thing to consider is what the right purchase price is, according to our experts.
"The tricky thing here is that most of the time the buyer and seller want a fixed strike price or sale price of the apartment that will take place in the future," says real estate broker Max Dobens. "With all of the ups and downs since 2006, that has been hard to do."
In addition to fixing the sale price, real estate attorney Jeffrey Reich suggests the following checklist:
- Negotiate the amount of monthly rent applied to the purchase
- Make sure you have a valid, binding contract to purchase.
- Consider negotiating a right to have the contract recorded (if it's a condo) or to file a UCC financing statement (in the case of a co-op) so the owner doesn't sell the apartment out from under you.
- Consider getting the approval of the board, so you don't find your purchase application rejected after a year or two of rent payments
Also make sure you remove your renter goggles long enough to examine the folks in charge of protecting what will probably be the largest investment you will ever make.
"Renters usually don't care about who runs a building," observes investigative lawyer Philip Segal, "but as an owner those people on the board will be your co-owners and possibly colleagues if you ever serve on the board."
He suggests you get these questions answered:
- Is the board or individual members prone to litigation?
- Is the building involved in any legal battles? Such things may be disclosed in the annual report, but you should get the public documents to make sure the board has fairly characterized it
- What do ex-residents have to say about how the board operates? Is it transparent? Honest? Fair?
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