lease-purchase agreement

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Lease-purchase agreement

An agreement that allows for portions of lease payments to be used to purchase the leased property.

Lease-Purchase Agreement

An agreement between an owner and a renter to rent a property, often but not always real estate, for a certain period of time during which the renter can apply his/her rental payments toward the purchase of property, if he/she desires. For example, suppose one rents a house for $600 per month. In a lease-purchase agreement, the $600 may be held in escrow and may be applied to a down payment on the house at the end of the lease, if the renter so chooses. If the renter does not choose to buy the house, the money in escrow goes to the owner of the property as if it had been rent all along. It is also called a rent-to-own agreement.

lease-purchase agreement

An installment sale.The tenant sometimes pays a higher-than-market rent for the property,with a portion of the monthly payment earmarked as rent,another portion as principal payments,and another portion as interest.

Landlords should not rely on a lease-purchase agreement as a mechanism to keep all payments and bypass foreclosure if there is a default by the tenant.Courts are very antagonistic to such forfeitures. By planning ahead and classifying the different aspects of the monthly payments,you can avoid the possibility of a court deciding things for you or the IRS deciding how to treat the income.

References in periodicals archive ?
About the author - Rent-to-own professional, Sonja Skye leverages industry knowledge and a team of industry professionals to enable average people to achieve their dreams of becoming home owners and sage investors through her company Rent To Own Wealth.
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Under the Lib Dem proposal, the government would partner with housing associations to deliver rent to own houses where monthly payments are no higher than market rent.
Mr Clegg said yesterday how his rent to own programme would see [euro]rst-time buyers steadily build up a share in their home through monthly payments equivalent to rent until they own the property outright after 30 years, just like a normal mortgage.
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But people who rent to own are typically low-income families who don't have the cash or credit to buy home furnishings from conventional retailers.
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But now that prices are a fraction of what they were a few years ago and houses are spending months and months on the market, more sellers are leaning towards a rent to own option.
com)-- HomeRun Homes is proudly celebrating their 9th anniversary, and is announcing substantial strides toward their goal of bringing the Rent to Own Option into the mainstream of Real Estate Transactions.
Emaar also announced an attractive special offer for Rent To Own customers who convert to ownership by the end of September.
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