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Lots of people are interested in our easy Rent-to-Own agreement. Here is our version of a Frequently Asked Questions section. Please make sure you read all of this information completely, and write down your specific questions. We'll be happy to help you, but please be considerate of our time. This web site and all the examples presented will answer most of your questions.
This is the plain English version of the official legal contract. In our attempt to make this a truly win-win situation between KLSM, Inc. and our potential tenant/owner, we would like the intent of the contract to be easily understood, and we would like the legalities of the contract to protect both parties. KLSM, Inc. strongly suggests that our potential tenant/owner have the final contract reviewed by an attorney.
In summary, KLSM Inc. would like to make it easy to acquire a home, without all of the traditional expenses associated with closing costs, attorney's fees, broker's commissions, bank fees and etc. We would like to dispel the notion that rent is just "money down the drain". We believe that Rent-To-Own has benefits for all parties involved.
Other Rent-To-Own programs allow only a certain percent of the rent payment to be attributed to the purchase price of the home. We allow 100% of the rent payment to be attributed to the purchase of the home.
Quite frankly, KLSM, Inc. has spent a lot of time and money putting together a unique contract which protects both the buyer and the seller. We don't want other people to steal this idea! The actual contract, written with a minimum of "legalese", will be provided to serious inquiries only.
So this section of our web site outlines in plain English what the different sections of our contract details. The actual contract is amenable to slight modifications, based on your individual circumstances. Again, we strongly recommend that you use an independent attorney to review the actual contract to make sure that your intents are protected.
The contract is written as a "Lease Agreement (with purchase option)". What this means is that you are officially a tenant of KLSM, Inc., until you make the last payment on your lease agreement. This is no different than when a bank provides a traditional mortgage: you don't really "own" the house until the bank is satisfied and you have made your last payment.
You make a one-time, non refundable down payment (which is the purchase of your option), and then pay your monthly rent. In other words, instead of paying a mortgage to the bank, you pay rent to KLSM, Inc. After your lease agreement is satisfied, you are the owner of your home.
How long is that agreement? It can be anywhere from 10 years to 30 years; you decide. Therein lies the true strength of working with KLSM, Inc. You decide how long the term is, based on what is a comfortable monthly check to write. Of course, the longer the term, the more interest you will pay over time. Part of the money you pay every month will be applied to principal, part to interest, part to insurance, and part to taxes. That's right, KLSM, Inc. will pay your taxes and insurance for the life of your agreement with us.
Here's where the terms are great. The amount of your rent per month includes principal on the loan, interest payments and all other closing costs. This monthly figure also includes property taxes, school taxes, county taxes, and insurance on the property. Try to find a place which will give you terms like that!
This price does not include any legal fees you wish to incur (we can't estimate the cost of your attorney), nor any recording fees at the county clerk's office for legal transfer of ownership (estimated to be less than $100). In fact, if a fee is not listed as "included" above, then you may assume that it is your responsibility.
This is your home, and you should treat it as such. In fact, if you don't maintain the house with some degree of pride of home ownership, that could be considered doing damage to the house and could be terms for eviction. In other words, you may not turn the house into a slum.
Recently, another web site summarized it this way:
"Now you may be thinking, 'OK, what's the catch? This sounds too good to be true.'
"Answer, there is no catch...we believe in providing value to families looking to take pride in home ownership, building community, and living the American dream...
"...There are several reasons.
"First, we are trying to build a business by creating value that doesn't exist today. We can only accomplish this goal through quality referrals from our Tenant Buyers, Sellers, and Landlords (and even their neighbors!). Giving back rent credit helps a family to buy a home more quickly than they could trying to save 10% or 20% to put down on a new home purchase. This gives them a head start toward building equity.
"Second, when one sells a home through a realty service, a commission of 5-7% is typically paid. In the example above, this can cost more than the rent credit. Since we are not dealing with any realtors in this transaction, there is no commission and we can afford to pass along the credit to you, the Tenant Buyer.
"Third, when the Tenant becomes the Tenant Buyer (via rent to own), there is an immediate sense of pride in ownership. Tenant Buyers add value to the community. They take care of their future property, make improvements, and feel good knowing their rent money is working for them (reducing the purchase price) rather than just making their Landlord rich."
Other Rent-to-Own outfits have besmirched this win-win concept by being underhanded and acting without scruples. One example is presented here. The reputation is that they would evict a tenant with only a few payments left, on the thinnest of excuses. That tenant lost all rights to the property, and ended up in the same situation KLSM, Inc. is trying to avoid: rent = money down the drain.
We will not do that to you. The only way you will get evicted is by doing damage to the house, not paying your rent, or by violating one of the terms of the agreement.
Please keep in mind that your status as a "tenant" does make it easy to evict you for damage to the premises, non-payment of rent, or violation of the agreement. This is a safety measure for KLSM, Inc., and it is your responsibility to make sure that this safety measure need never be implemented.
If that safety measure does need to be implemented, please be aware that action will be swift and final. All monies paid to KLSM, Inc. to that point are simply rent, and that all equity you have developed in the property is lost. The best thing to do is to not get evicted. If life events force you to leave the property, you will have just paid rent.
For some people, this can be a good thing. Life does get in the way of the best laid plans, and if you need to discontinue your relationship with KLSM, Inc., you can leave with 30 days written notice. Thus, if there is a job transfer to another city, or a death, or a divorce, or any other untoward event in your personal life, you can get out of your contract with KLSM, Inc. with just 30 days written notice. Your initial down payment is non-refundable as are rents paid to date, of course, but there are no penalties for discontinuing your contract with KLSM, Inc, assuming that the dissolution of the contract is done with good communication. KLSM, Inc. will work with you if you need to get out of your agreement.
KLSM, Inc. is a corporate entity, but we are not a nameless faceless organization. We are people looking to help other people in a mutually beneficial way. Things happen in all of our lives, events which are out of our control. KLSM, Inc. is but a phone call away. Good communication is essential when life gets in the way of the best plans! Don't risk losing your home because life deals you a bad blow; responsible individuals who communicate with us will be spared from ruin.
We are looking for individuals and families who are ready to accept the responsibility of home ownership. We are looking for a "win-win" agreement, whereby we make a modest monthly profit, and you end up owning a house. This is somewhat "out of the box" thinking, but "inside the box" is unnecessarily expensive and difficult for you.
Instead of paying a mortgage to the bank, you pay rent to KLSM, Inc. This eliminates all the "middle man" syndrome, and keeps your costs to a minimum.
Please keep in mind the following. If you were to get traditional bank financing, you would not call the bank loan officer in the middle of the night to report a stopped-up toilet. In the same way that you would not call the bank for minor maintenance problems, you will not call KLSM, Inc. to report problems with your house that any reasonable home owner would expect to happen; just fix the minor problem before it becomes a major problem, and life goes on.
Maintenance is the responsibility of the Tenant Buyer. You are now renting to own and homeownership requires maintenance. This includes things like broken windows from stones or baseballs, clogged drains, peeling paint, broken appliances, burnt out bulbs, lawn work/snow removal, etc.
Major problems with a house, like needing a new roof, are predictable items associated with home ownership. These expenses are also your responsibility, just as they would be if you used traditional expensive financing from a bank. Since KLSM, Inc. has a vested interest in the property during the length of our agreement, we will require that you call us and discuss the situation before doing any major repairs.
We may have suggestions for a specific contractor to contact, for better, speedier and less expensive repairs. We have found that there are a lot of contractors who are not worth the paper on which their business card is printed. Please use our contacts and contractors to make your life easier. KLSM, Inc. will also be able to help you finance those more costly repairs, and add those expenses to the end of your note with us.
Do your due diligence before entering into an agreement. You'll find we offer the best deal around!
Please feel free to contact us with any questions or requests you may have. The more information you provide, the better we can meet your needs.
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KLSM, Inc. P.O. Box 347 Arkport, NY 14807 607-765-1270 KLSMInc@aol.com |
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