Lease Purchase Agreement
What is a Lease Purchase Agreement?
A Lease Purchase Agreement is a legal contract that allows a tenant to lease a property with an option to purchase it at a later date. This agreement combines elements of both a lease agreement and a purchase agreement, providing the tenant with the flexibility to rent the property for a specified period of time and then decide whether to buy it. It is often used by individuals who are not yet ready to commit to purchasing a property but want the option to do so in the future.
What are the types of Lease Purchase Agreement?
There are two main types of Lease Purchase Agreements: 1. Option to Purchase: This type of agreement grants the tenant the option to purchase the property at a predetermined price within a specified timeframe. The tenant pays an upfront fee, known as the option fee, for the right to purchase the property. If the tenant decides not to purchase the property, the option fee is usually non-refundable. 2. Lease with Purchase Obligation: In this type of agreement, the tenant is obligated to purchase the property at the end of the lease term. The rent payments made during the lease period are often credited towards the purchase price of the property.
How to complete a Lease Purchase Agreement
Completing a Lease Purchase Agreement involves the following steps:
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