Lease Purchase Agreements |
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A Lease Purchase Agreement is usually two separate agreements between the parties: a Lease Agreement and a Purchase Agreement. The Lease Agreement is a fairly standard rental agreement. The Lease Purchase Agreement is a purchase/sale agreement whereas the tenant/buyer is contracting to purchase the house for a specified price and term. The Lease Purchase shows a definite intent to purchase the property, and sets the terms upon which the sale of the property will occur. This differs from a Lease Option where the tenant/buyer has the right but not obligation to purchase the property.
The value of the home may increase if the Lease Purchase Agreement has a term of many months or years, but the price and other terms are fixed in the purchase agreement. The seller cannot sell the house to anyone else as long as the Lease Purchase Agreement is in force.
The Purchase Agreement should contain all the terms normally found in a Purchase Agreement, including such issues as closing costs, buyer's inspection rights, what the seller's disclosure obligations will be, what personal property will be included or excluded from the sale, and what will happen in the event either party does not comply with the contract.
There is no standard lease purchase agreement, so read over the entire agreement and know who you are dealing with. If in doubt, run any forms by your lawyer prior to signing.
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