Rent-to-own (a lease option or lease-purchase) lets you lease your home to a tenant-buyer who intends to buy it within a set window, usually one to three years. ClozeEZ lists the home and generates the Arizona purchase contract for the eventual sale; the lease and the option agreement come from an Arizona attorney. You collect rent now and lock in a sale price for later. The buyer pays an upfront option fee for the right to purchase and often a rent credit toward the eventual down payment. It's a good fit for buyers who need time to save or repair credit, and for sellers who want income now and a likely sale later. The catch: a lease option and a lease-purchase are different commitments, and both must be papered carefully to avoid disputes.
These two terms get used interchangeably, but they carry very different obligations for the buyer, and you should know which one you're signing.
Most sellers prefer a lease option: you get the upside of a committed buyer without being locked into a buyer who may not be able to close. Whichever you choose, name it correctly in the contract; the wording determines your rights.
The three cash pieces of a rent-to-own deal
| Piece | What it is | Typical range |
|---|---|---|
| Option fee | Upfront, usually non-refundable payment for the right to buy | 1%–5% of the price |
| Monthly rent | Ordinary rent during the lease | At or slightly above market |
| Rent credit | A portion of each rent payment applied to the future purchase | 10%–30% of rent |
| Purchase price | The price locked in now for a sale later | Set at signing or by future appraisal |
The option fee is your compensation for taking the home off the market and is typically credited toward the price if the buyer purchases, but kept if they don't. Rent credits sweeten the deal and build the buyer's down payment. Because you're locking the price now, think about where values may be in one to three years when you set it.
Weighing rent-to-own
| Pros | Cons |
|---|---|
| Income now: rent plus a non-refundable option fee | You remain the owner (and landlord) during the lease |
| A tenant-buyer tends to treat the home as their own | The buyer may not qualify or may walk at the end |
| Locks in a sale price and a likely buyer | You carry ownership costs: taxes, insurance, major repairs (unless negotiated) |
| Wider buyer pool than a cash-now sale | Locking price now means missing upside if values jump |
| Option fee is kept if the buyer doesn't close | Structures are easy to get legally wrong; disputes over credits and equity are common |
Rent-to-own rewards precision. The most common problems all trace back to vague paperwork: fights over rent credits, whether the buyer 'owns' equity, or whether the option was validly exercised. Spend on good documents up front and the structure works smoothly.
A lease option gives the tenant-buyer the right, but not the obligation, to buy during the option period; if they don't, they forfeit the option fee and rent credits. A lease-purchase obligates them to buy at the end of the term. Most sellers prefer a lease option because it isn't as hard to unwind if the buyer can't perform.
Usually not. The option fee is the buyer's non-refundable payment for the right to purchase and for taking the home off the market. It's typically credited toward the purchase price if they buy, and kept by you if they don't, but spell this out clearly in the option agreement.
It's negotiable and must be written down. During the lease you're still the owner, so absent an agreement you'd typically carry taxes, insurance, and major repairs, while the tenant handles routine upkeep. Many rent-to-own contracts shift more maintenance to the tenant-buyer; just define it precisely to avoid disputes.
Under a lease option they can simply not exercise the option; you keep the home, the option fee, and the rent credits, and can re-lease or sell. Under a lease-purchase they were obligated to buy, and enforcing that can require legal action. Either way, screen for a realistic path to financing before you sign, and have an attorney confirm your remedies.
List your Arizona home free on ClozeEZ. A flat $200 Platform Success Fee is owed only if your home closes: no close, no fee, no percentage.
Informational only, not legal or financial advice. ClozeEZ is a software platform, not a real estate broker or law firm. Consult an Arizona attorney for legal questions specific to your sale.