Lease Purchase Contract
What is lease purchase contract?
A lease purchase contract is a legally binding agreement between a landlord and a tenant that combines elements of both a lease agreement and a purchase agreement. In this type of contract, the tenant has the option to purchase the property at a later date, usually after a certain period of time or under specific conditions. It offers the tenant the opportunity to live in the property and test it before committing to buying it.
What are the types of lease purchase contract?
There are two main types of lease purchase contract: 1. Lease with option to purchase: In this type, the tenant has the option, but not the obligation, to purchase the property. The purchase price is usually determined at the beginning of the agreement. 2. Lease with obligation to purchase: In this type, the tenant is obligated to purchase the property at the end of the lease term. The purchase price is often determined at the time of signing the lease agreement.
How to complete lease purchase contract
Completing a lease purchase contract involves the following steps: 1. Agree on the terms: Discuss and negotiate the terms of the lease agreement and the purchase option with the landlord. 2. Draft the contract: Prepare the lease purchase contract, ensuring that all the agreed-upon terms are documented accurately and clearly. 3. Review and sign: Carefully review the contract, seeking legal advice if necessary, and then sign it along with the landlord. 4. Fulfill obligations: Both the tenant and the landlord must fulfill their obligations as stated in the contract, such as making monthly payments and maintaining the property. 5. Execute the purchase: If the tenant decides to exercise the purchase option, they must follow the procedures outlined in the contract to complete the purchase.
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