When is Purchase Agreement done in a Rent to Own?


Frequent Forum Member
REIN Member
First - thanks so much REIN and all the other folks involved in Saturday's event in Edmonton. It was a jam-packed day - I loved it.

I have many questions, but one at a time - Is the "offer to purchase" done when the Rent to Own deal is drafted, or after the term is completed and the Tenant Buyer actually is ready to buy the property? When are the conditions removed? I am thinking financing must be a condition, and yet obviously they can't qualify when they begin the RTO contract - so - just wondering about that process. On the other hand, when the term is ending and if they can't qualify for financing, their deposit must stay with the owner, so - just not sure how that all works.

Is a bank involved on the purchase (the purchase by the Tenant-Buyer) from the beginning of the process or are they brought into the picture towards the end, and the Tenant -Buyer in the meantime is simply working towards their goal with counselling from the mortgage broker to set them up for success with the banker at the actual closing time?

I will be studying the documents this week and my answer is probably in there, but hopefully someone will make this simple for me?

Thanks for all comments.


Real Estate Maven
REIN Member
I don't draft the purchase agreement until the client pays his "exercise of option fee" and notifies me that he is ready to buy. Some people don't use an exercise of option fee, and I wondered about it myself, until I had a client that kept attempting to exercise his option when his financing was not yet pre-approved.

My purchase agreements are unconditional. Of course, if the client is not able to complete the purchase, the purchase deposit may be transformed back into an option payment on a new option.

We encourage our clients to start the pre-approval process a couple of months before the lease and option are due.