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The future sales agreement is an agreement in which the parties undertake to conclude the sale of the property at a later date. The lease with future sales agreement is an alternative to the real estate sale that proves very useful when you do not have immediate financial availability.
With this contract template you agree with the seller on a normal relationship of rent followed, however, by the possibility of purchasing the property at the end of the lease period. The monthly payments are therefore considered as installments paid for the purchase.
An interesting formula, don't you think? If you want to know more, we at Casavo will explain all the details in this guide. We recommend that you read to the end!
How does a lease with a future purchase agreement work
A lease with a future purchase agreement is configured as an atypical contract divided into two distinct phases. The first involves a regular rental relationship; the second, however, constitutes a preliminary sales agreement for the transfer of ownership of the property.
The preliminary contract can be of two types:
- unilateral, which requires the transfer of ownership only for the tenant, while the tenant retains the right to renounce the purchase;
- bilateral, which binds both parties to the sale.
Let's try to simplify the legal language a little. Let's imagine for you a template of a rental agreement with a future sale agreement. The agreed period is three years plus the option for tacit renewal for another two (the classic 3+2) with a bilateral preliminary agreement. Once the five years have passed, you will have effectively purchased the house. In the case of a unilateral agreement, however, you will have the right to renounce the purchase.
As you can see, this option has numerous advantages, especially if you can't decide between buying or renting a house.
Lease agreement with future sale agreement: rental fee template
As regards the total amount to be paid to conclude the purchase, there are two main options you can decide with the seller:
- payment of the ordinary rent, i.e. the one established based on the market value;
- payment of a rent increased which includes, in addition to the rent, a monthly fee intended to cover the sale price.
In the event that the value of the house is still higher than the amount paid monthly, it will be necessary to establish with the other party the methods for paying the missing amount. Usually you can choose to agree with the seller of the property for the payment of a deposit and a final balance, in addition to the confirmation deposit.
If we imagine a rental agreement with a future sales agreement to be filled out, therefore, the following will need to be indicated:
- the duration of the relationship;
- the amount of the monthly rent, whether increased or standard;
- the confirmation deposit;
- any deposits and final balances;
- whether the agreement is unilateral or bilateral.
All these items are necessary for final validity and we recommend that you check carefully that they are filled out correctly.
What does the Civil Code say about this type of contract
The Civil Code does not provide specific rules for leases with a future sale agreement, but refers to them in Article 1526, paragraph 3, dedicated to the termination of the contract. This means that the institution is still subject to definition on a case-by-case basis based on gradually consolidated habits. There is essentially no fixed rule on the matter, but a series of provisions that have followed one another over time.
Lease agreement with future sale agreement: fiscal and contractual aspects
At this point you might ask yourself: in a hybrid situation such as a lease with future sale agreement, how does taxation work?
In the case of a bilateral preliminary purchase agreement, the payment of the taxes required for the purchase of the house – therefore the land registry, mortgage and registration fees – is the responsibility of the buyer and must be made at the moment of signing, as well as the payment of VAT. In this regard, the value added tax is calculated on the total price of the transaction, while it is not included in the various monthly payments.
As for maintenance taxes such as IMU, however, they remain the responsibility of the owner, and the property constitutes income for the calculation of direct taxes. This tax relief during the rental period is certainly an advantage for those who buy, but it represents a brake for those who commit to selling the property at a later date.
So, is this type of agreement always advantageous? To clarify the question, let's see what are the advantages and disadvantages for the two parties in the lease agreement with a future sale agreement between private individuals.
Advantages for the seller
- You retain ownership of your property until the agreed price is paid in full.
- You receive a fixed monthly income that can even exceed the normal rent.
Advantages for the buyer
- During the rental period, you are only responsible for ordinary maintenance costs, while direct and local taxes remain the responsibility of the owner and, in general, you benefit from the protections provided by the legal regulations on leasing.
- You obtain deferred ownership of a property without the immediate payment of the total amount and without taking out a mortgage, thus saving on the related interest.
- To protect your rights, you can oppose the lease contract to any third-party buyer who may take over.
Disadvantages for sellers
- Taxes and fiscal charges remain your responsibility during the rental period.
- The extraordinary maintenance of the property, as well as the costs relating to any condominium works, are your responsibility.
- If you intend to withdraw from the sale, you will have to refund the deposit with an increase usually equal to double the amount, depending on the draft lease agreement with a future purchase agreement.
- If something does not work out and you decide to reclaim the house, you will need to contact to the judicial authority to activate the eviction procedure.
Disadvantages for those who buy
- In the case of a bilateral agreement, as in our lease with a future sale agreement template, you will have to immediately pay taxes and VAT.
- In unilateral agreements, if you decide not to proceed with the purchase you cannot ask for the deposit back.
- In the event of the seller's bankruptcy, you run a high risk of not being able to obtain the property, in the event of failure to transcribe the preliminary in the land registers.
As you can see, this type of agreement represents an excellent alternative to the traditional purchase, especially if you do not have immediate financial availability or are having difficulty obtaining a mortgage. The disadvantages for buyers are all in all limited, especially if the form in the lease with a future purchase agreement is filled out carefully in every detail.
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