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Montana Rent-to-Own (Lease Option) Agreement

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Updated on September 25th, 2021

A Montana rent-to-own agreement combines two (2) types of real estate contracts – a residential lease agreement and a purchase option agreement. A rent-to-own arrangement is set up so the landlord/seller can rent their property to a tenant/buyer on a fixed-term lease and, upon termination thereof, give the buyer the option of purchasing the property. In rent-to-own agreements, the tenant pays rent throughout the lease and is bound by all other terms and conditions normally included in a rental contract.

In addition to the rent payments, the landlord will demand an option deposit from the tenant, which is basically a down payment on the property. While the tenant is living on the property, they can use this time to build their credit score, save up money for the down payment/purchase price, and talk to banks about mortgages so they can afford the property at the end of the lease.

Rental Laws – Title 70, Chapter 24 (Residential Landlord and Tenant Act)

Purchase Agreement Laws – Title 70: Chapter 20 (Transfer of Real Property) and Chapter 21 (Recording Transfers and Other Transactions Relating to Real Property)

Disclosures (5)

  1. Lead-Based Paint
  2. Methamphetamine
  3. Mold
  4. Names & Addresses
  5. Statement of Condition

1) Lead-Based Paint Disclosure

Renting out property built before 1978 means that the landlord has to notify all tenants of the possibility that lead-based paint may be present on the premises.

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2) Methamphetamine Disclosure

If the landlord is aware of the fact that the property they are renting was used for the production of methamphetamine and was not remediated to the required decontamination standards, they must notify the tenant in writing before entering into a lease agreement.

3) Mold Disclosure

Providing this mold disclosure to tenants absolves the landlords of any liability pertaining to the presence of mold on the property. It further states that it is the tenant’s responsibility to check for mold before moving onto the premises.

4) Names and Addresses

Before the commencement of tenancy, the tenant must receive from the landlord the names and addresses of the person authorized to manage the premises and the owner (or person authorized to act on their behalf) for the purposes of receiving and sending notices and demands.

5) Statement of Condition

Whenever a landlord demands that a tenant pay a security deposit before renting their property, the landlord must deliver to the tenant a statement detailing the present condition of the premises.

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