Rent to own for family

Member since 2022 · 1 post · 0 votes

My sister and I own our parents' home 50/50. She and her husband have decided to purchase the home and they want to move in Dec 1st so they can put her current home up for sale. Once their current home is sold she will buy me out. If they were not going to purchase it, it would be listed for sale. Should I prepare a month to month rental agreement and have them pay the utilities, insurance and property taxes since it is as if they are purchasing the house today with a delayed payment.

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Diana KhanPro Member

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 806 posts · 291 votes

Quote from @Yvonne Lillebo:

@Yvonne Lillebo, I would definitely put something in writing before they move in on December 1. Since you and your sister already own the home together, I wouldn't treat this as a typical month to month rental without looking at the full arrangement. I'd want an agreement covering who pays the utilities, insurance, taxes, and repairs, along with when and how your sister plans to buy out your share. I'd also address what happens if her current home takes longer to sell.

In my experience working with previous clients as a real estate attorney in Maryland, I've seen how important it is to have clear agreements when family members share property ownership. Even when everyone gets along, misunderstandings can happen over expenses, payment timelines, or what each person is responsible for. Getting those details in writing early can help protect everyone involved.

I appreciate you sharing this, @Yvonne Lillebo! Family property arrangements are something I deal with in my real estate and estate planning work, and I know how important it is to handle them carefully. Wishing you and your family a smooth process, and happy to stay connected!

[email protected]240-266-0291

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Diana KhanPro Member
Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 806 posts · 291 votes
1d
Quote from @Yvonne Lillebo:
My sister and I own our parents' home 50/50. She and her husband have decided to purchase the home and they want to move in Dec 1st so they can put her current home up for sale. Once their current home is sold she will buy me out. If they were not going to purchase it, it would be listed for sale. Should I prepare a month to month rental agreement and have them pay the utilities, insurance and property taxes since it is as if they are purchasing the house today with a delayed payment.
@Yvonne Lillebo, I would definitely put something in writing before they move in on December 1. Since you and your sister already own the home together, I wouldn't treat this as a typical month to month rental without looking at the full arrangement. I'd want an agreement covering who pays the utilities, insurance, taxes, and repairs, along with when and how your sister plans to buy out your share. I'd also address what happens if her current home takes longer to sell.
In my experience working with previous clients as a real estate attorney in Maryland, I've seen how important it is to have clear agreements when family members share property ownership. Even when everyone gets along, misunderstandings can happen over expenses, payment timelines, or what each person is responsible for. Getting those details in writing early can help protect everyone involved.
I appreciate you sharing this, @Yvonne Lillebo! Family property arrangements are something I deal with in my real estate and estate planning work, and I know how important it is to handle them carefully. Wishing you and your family a smooth process, and happy to stay connected!
[email protected]240-266-0291
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Chris ColtonPro Member
Investor · San Antonio, TX · Member since 2026 · 146 posts · 63 votes
1d
Yvonne, Diana has the legal side right. I would only add this from the seat I sit in. Get the buyout in writing before your sister moves in on Dec 1, not after. Put down the price, the date it has to happen by, and what happens if her current home takes longer to sell. Family deals go sideways on timing more than on money, and once she is living there the paper is the only thing holding the plan together. I am still learning this myself, but the written terms are what protect everyone when life moves slower than the plan.
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Harrison C.
Member since 2017 · 117 posts · 62 votes
22h
Yvonne, two things nobody has mentioned yet, both worth doing before December 1.
Call the insurance company on your parents' policy. A homeowners policy is written for the people living in the house, and once your sister's family moves in under a rental agreement the insurer may treat it as a rental and turn down a claim. Ask them to name your sister and her husband as the people living there, or have them take out their own policy with you named on it, and get the answer in writing.
Agree the price now, not when her house sells. If the house is worth more by then, you will each remember the number differently. Pick a value today (an appraisal costs a few hundred dollars and settles it for both of you), write it into the agreement with the buyout date, and say what happens if that date passes.
On the month to month agreement itself: if they pay you anything for your half, ask whoever does your taxes how to report it, because it can count as rental income for you. If they only cover the taxes, insurance and utilities, keep the receipts so the costs are easy to settle at closing.
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Noah WrightBusiness Member
USA, Nationwide · Member since 2024 · 486 posts · 152 votes
22h
You're right to treat it as a sale with a delayed payment, and that's exactly why the insurance piece deserves a call before Dec 1. Tell the insurer who will be living there. Insurers price and cover a home based on who occupies it, and a policy written for a vacant or estate home, or one that doesn't list the people actually living in it, can give the company room to push back on a claim. Since you still own half until the buyout closes, you'd want to stay a named insured the whole time, even if your sister pays the premium. Her and her husband's own belongings and liability are a separate thing to sort out with the agent. Coverage follows who lives there, not just whose name is on the deed. Is the policy still in your parents' names?
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Jim Johnson
Real Estate Agent · Memphis · Member since 2026 · 632 posts · 362 votes
21h
I wouldn't treat this as a regular month-to-month rental without also having a written buyout agreement. Since you still own 50% of the house until the sale closes, I'd want the purchase price, payment deadline, and what happens if her current home doesn't sell clearly spelled out before they move in. You can agree on who pays utilities, taxes, insurance, and any occupancy costs in the meantime, but I'd have a real estate attorney put it together. Family arrangements can get complicated quickly when ownership and payment don't change hands at the same time.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
20h
Yes very wise decision. Even though they are family this is a contractual / legal relationship so treat it no differently then some random stranger off the street
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Patrick O'SullivanBusiness Member
Property Manager · Phoenix, AZ · Member since 2024 · 563 posts · 215 votes
19h
I’d also spell out improvements and big repairs in the agreement. If your sister renovates before the buyout, or the roof fails in the meantime, you’ll want it clear who pays and whether it changes the price.
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