Apartment rental agreement with subsequent redemption: conditions and nuances of the procedure

Renting an apartment is considered a popular process among many people who do not have their own real estate for permanent residence. For the use of someone else’s housing you have to pay monthly rental payments, so often citizens think about how to rent out an apartment with a subsequent purchase. Such an opportunity is offered by a limited number of landlords, but at the same time it has many advantages for each participant in the transaction.

The concept of rental housing

Renting an apartment with subsequent redemption consists in the fact that tenants can live in housing on a regular basis, regularly transferring monthly rental payments to the owner, and at the end of the contract they have the opportunity to buy the property from the owner for a certain amount of money. The features of this process include:

• the contract necessarily provides for the possibility for the tenant to redeem the property;
• The repurchase process may take place before the expiration of the contract or before the deadline;
• if there is no redemption condition directly in the contract, it can be provided for in a special supplementary agreement, but it immediately stipulates whether the previously paid amount will be credited to the redemption price.

Each participant must monitor the correctness of the contract.

Transaction details

This transaction is considered beneficial for tenants who do not have large savings for the purchase of real estate. Therefore, with the help of renting an apartment from the developer with subsequent redemption, you can become the owner of a full-fledged housing.

Landlords, on the other hand, lose their income in the form of monthly rents, so it’s almost impossible to find such options. They are offered only in large cities, as owners cannot find a buyer for expensive real estate.

Benefits of the transaction for participants

Renting an apartment with a subsequent purchase has both advantages and disadvantages.

The advantages for the lessor include:

• real estate is acquired by tenants at a price in excess of the market value of the property;
• transfer of ownership is carried out exclusively after the full price of the apartment has been transferred.

The advantages for tenants include:

• it is possible to live in the apartment until its final purchase;
• no mortgage loan required;
• significant interest is not paid, which often make up the full price of the apartment;
• if a person does not have an official place of work, then even under such conditions the owner of the apartment will not refuse to draw up a rental contract;
• the citizen has the right to redeem the housing, but if he does not collect the required amount by the end of the contract, he can refuse the redemption.

Therefore, many citizens wish to rent an apartment for rent with subsequent redemption. But first, it is recommended that you carefully study the disadvantages of this process.

Cons of a deal for a landlord

Such a rental has many disadvantages for the immediate owner of the apartment:

• there is a possibility of losing a certain part of the profit if, during the period during which the apartment is on lease, its value increases significantly, but the agreement does not work out;
• there is no possibility to use the facility for its intended purpose for personal purposes.

Due to these shortcomings, offers for such a lease are rarely found.

Cons for the tenant

Even for tenants, such a transaction is considered dangerous due to some disadvantages:

• during the lease term, it will not be possible to dispose of the real estate fully or use it at its discretion, as it is often indicated in the contract that there is no possibility to invite guests, bring in pets or perform other similar actions;
• there is a risk that the other party to the transaction for various reasons will refuse to fulfill the contract, and the lessee will not receive previously paid funds;
• the owner may die before paying the full price of the apartment, so you will have to draw up a new agreement with his heirs, who usually try to improve the conditions for themselves, so buying an apartment becomes simply unprofitable;
• the owner of the property can dispose of housing at his discretion, therefore, he can use it as a pledge or transfer it at all as a gift, and there is always the possibility that an apartment will be seized for debts.

Therefore, an apartment rental contract with a subsequent redemption is rather rare. This is due to significant risks and disadvantages for each side of the transaction.

The nuances of concluding a deal

To conclude such a transaction, it is important to draw up a proper lease for a limited period of time. The nuances of the apartment rental agreement with the subsequent purchase are as follows:

• the agreement must indicate the possibility of transfer of the right to the object to the lessee after a certain period of time;
• the object becomes the property of the tenant only after he makes the last payment under the contract;
• the parties independently stipulate all conditions on the basis of which cooperation will be carried out.

Particular attention is paid to the drafting of the agreement, since it must have conditions that are acceptable to each participant in the transaction.

How is a contract made?

The procedure for providing rental housing, which can be redeemed after the term specified in the contract, is divided into successive stages:

• initially, the tenant finds housing suitable for his requirements, and often he can independently place ads on different sites: “I will rent an apartment with a subsequent purchase”;
• the parties to the transaction stipulate all conditions under which cooperation will be carried out, therefore, the terms of the lease, the cost of housing, the size of the down payment, as well as other nuances, are determined;
• documents for the apartment are prepared by the owner of the object;
• An agreement is drawn up, carefully checked and signed by the parties;
• The two parties to the transaction comply with the requirements specified in this agreement.

Often, citizens have certain disagreements, so often the process of drawing up an agreement takes a lot of time. If the parties cannot come to a compromise, then an apartment rental agreement with a subsequent purchase is not drawn up.

If the conditions suit both participants, then the lease term, which cannot exceed 10 years, is indicated.

What documents are needed?

To draw up such a lease agreement, the owner of the object and the tenant prepare certain documentation. It includes paper:

• passports of both parties to the transaction;
• if the owner of the property is legally married, his spouse draws up a written permission to provide an apartment for rent on certain conditions;
• marriage certificate;
• extract from the USRN to the apartment where the direct owner of the property is registered;
• a technical plan and a passport for the object, and with the help of these documents the tenant will be able to understand whether there is an illegal redevelopment in the apartment;
• title papers on the object, which include the contract of sale, certificate of inheritance or other similar documents;
• Bank account number where funds will be transferred by the tenant for housing;
• a report on the assessment of real estate, on the basis of which the optimal payment for the apartment is determined if the rental is purchased at the end of the term by the tenant;
• a certificate from Rosreestr containing information that there are no any encumbrances on real estate;
• a certificate from the housing department indicating the absence of debts for utilities.

Only on the basis of these documents is an apartment rental agreement drawn up with a subsequent purchase. A sample document is located below.

Terms of Agreement

The most common rental apartment in Moscow with subsequent redemption. This is due to the fact that real estate in the capital has a significant value, so it is difficult to find a buyer who is ready to immediately transfer the required amount as payment for housing.

When drawing up this contract, it is taken into account that it combines the features of a lease contract and a contract of sale. It is not necessary to register this document, since it is only necessary to contact the Rosreestr to confirm the transfer of the right to the object to the lessee.

Essential terms of the contract

When compiling this document, mandatory lease terms are introduced with the subsequent purchase of the apartment. Therefore, the following data is included in the contract:

• information on the parties to the transaction is prescribed, for which F. I. O. is indicated, passport details, place of residence and contact information about the participants;
• the subject of the contract described by the apartment is described; therefore, it is important to indicate its address, number of floors, area and other characteristics that make it easy to identify;
• the technical parameters of the facility are provided, and information can be taken from the technical documents for the apartment;
• the cost of rent is entered, represented by the amount of money that the owner will have to transfer so that the ownership of the property passes to the tenant;
• the payment scheme is indicated, for which the frequency of transfer of funds, the size of payments and other parameters are determined;
• the period when the final settlements between the parties to the transaction will be made;
• indicates the method of transferring money;
• it is prescribed that on the basis of this agreement, after all settlements, the ownership of the apartment will be transferred to the tenant;
• The exact date when the apartment will be issued to the tenant is indicated;
• charging and rental regulations are taken into account;
• Liability measures for each participant are listed in case of failure to fulfill the terms of the agreement;
• The conditions under which it is allowed to terminate the contract ahead of schedule are prescribed.

The more details and conditions are in the contract, the more secure the parties to the agreement will feel. After drawing up an agreement on renting an apartment with subsequent redemption, participants should only strictly follow the provisions of this document.

Transaction risks

There are certain risks for the seller to use such a contract. These include:

• over time, housing can significantly increase due to the development of infrastructure or changes in the market, but it will not be possible to make changes to an already signed agreement;
• housing can be used by the tenant for other purposes, so he can sublet it, making a profit from the process;
• utility bills may increase; therefore, it is advisable to indicate in the process of drawing up the contract that it is the user who must pay for these services.

Renting an apartment with a subsequent purchase is considered risky for the buyer. The main risks include:

• for the entire rental period, the property is the property of the seller, who can terminate the contract, sell or donate the object, and various burdens may be imposed on real estate;
• the seller may increase the rent or even the value of the apartment;
• if the owner dies, you will have to draw up another contract with his heirs, which often leads to worsening conditions;
• the object may be pledged or arrested.

Therefore, long-term rental apartments with subsequent redemption is considered a risky process for each participant.

Conclusion

Renting a property is considered a common procedure that allows you to use different objects without paying their full cost. If the contract contains the possibility of subsequent redemption of the apartment, then such an agreement is considered beneficial for the tenant.

It is important to correctly draw up a contract that includes the essential conditions for cooperation. Even when securing the relationship with an official document, each participant may face numerous risks and difficulties.