An agreement can also be structured to anticipate a future sale of the property by the parent to the adult child. Under a contract for deed, the buyer makes regular payments to the seller until the amount owed is paid in full or the buyer finds another means to pay off the balance. The parent would retain the legal title to the property until the balance is paid. It is a form of seller financing that can be utilized when a borrower cannot otherwise qualify for a conventional mortgage. The average length is 5 years, and the interest rate is not regulated (although if it involves a parent and an adult child, the AFR rates should be utilized). Payments can be structured in any fashion, although typically there are payments made for a term with a balloon payment due at the end of the term. The seller parent has repossession rights (like a bank foreclosing) when the buyer child defaults.
A rent-to-own agreement allows the potential buyer to enter into a lease agreement with the seller with the intention of buying the property at the end of the lease. Typically lease agreement language exists, but the agreement will also include details like an option fee, how much rent goes towards the purchase, terms for violating the agreement, and how the purchase price of the property will be determined. Both rent-to-own and contract for deed agreements are more formal agreements but can be structured with flexibility between the parent and child and can be the backbone of a solid exit strategy.
https://www.lonestarlegal.org/news/2019/06/rent-to-own-homes-you-could-be-a-victim/