Lease purchase contract

Lease purchase contract

A lease purchase contract (or lease option contract) is the abbreviated form of the appropriate term lease with option to purchase contract. It is a form of real estate purchase which combines elements of a traditional rental agreement with an exclusive option of right of first refusal to later purchase the home.

These contracts are commonly used where a buyer wants to purchase a home, but due to credit issues would not qualify for a conventional mortgage and does not wish to, or would not qualify, for FHA or VA financing.

Under the typical terms, the tenant/buyer chooses the home and seeks a landlord/seller to serve as an investor. The tenant/buyer then agree to a lease period, during or after which the tenant/buyer has the exclusive right to purchase the home at a previously agreed-upon price. The tenant/buyer pays to the landlord/seller a non-refundable option deposit that is applied to the purchase price of the home. The tenant/buyer then pays to the landlord/seller a sum that is typical to the rental amount usually on a monthly basis, of which a portion of that monthly payment may or may not be applied to the purchase price of the home, but which normally covers the mortgage amount owed by the landlord/seller.

Should the tenant/buyer not wish or be unable to purchase the house, the tenant and landlord can agree to extend the option period, convert the lease purchase contract into a traditional rental agreement, or end the contract with the tenant moving out and the landlord seeking other renters or buyers.


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • contract — con·tract 1 / kän ˌtrakt/ n [Latin contractus from contrahere to draw together, enter into (a relationship or agreement), from com with, together + trahere to draw] 1: an agreement between two or more parties that creates in each party a duty to… …   Law dictionary

  • end-of-lease purchase price — If there is a purchase option in the lease contract or agreement, this will be the agreed upon price for the purchase of the vehicle at the end of the lease the stated residual value. This price may also include additional fees …   Dictionary of automotive terms

  • Lease-option — A lease option (or lease purchase) is the abbreviated form of the appropriate term lease with option to purchase. It is a type of contract used in residential real estate. The contract is typically between two parties: the tenant (also called the …   Wikipedia

  • purchase option — Most closed end leases grant the lessee an option to purchase the vehicle at the end of the lease. The end of lease purchase price is usually the same as the stated residual value. Check your lease contract before signing to ensure that there is… …   Dictionary of automotive terms

  • CONTRACT — (Heb. חוֹזֶה, ḥozeh), in general law theory a legally binding agreement between two or more parties, in terms of which one party undertakes for the benefit of the other to perform or refrain from a certain act. As such, contract is the main… …   Encyclopedia of Judaism

  • Lease and release — is a temporary transfer (by sale) of title to real estate under real property law. Lease and release was a mode of conveyance of freehold estates, formerly common in England and in New York, its place is now supplied by a simple deed of grant. [… …   Wikipedia

  • LEASE AND HIRE — The Hebrew term sekhirut embraces the lease of immovable property (houses and fields) as well as the hire of movable property and personal services, and is a near parallel of locatio conductio rei in Roman law. In this article the term hire is… …   Encyclopedia of Judaism

  • Contract — law …   Wikipedia

  • Lease To Own — An arrangement where an individual enters into a lease agreement with an owner with the inclusion of a clause that typically gives the individual the right, but not the obligation, to purchase the item leased at a predefined price and time. More… …   Investment dictionary

  • contract — A legally binding agreement. Agreement arises as a result of an offer and acceptance, but a number of other requirements must be satisfied for an agreement to be legally binding: • there must be a consideration (unless the contract is by deed); • …   Accounting dictionary

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”