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 ?
In the last 12 months, Citizens Advice helped people with more than 13,000 rent-to-own issues where people were struggling to make repayments for essential goods like fridges and washing machines.
I distinctly remember my friends buying properties in Dubai during that period and this new rent-to-own scheme was a key point of discussion in several conference rooms.
Target: 14 rent-to-own stores located in Alberta and Ontario
Rent-to-own schemes were quite popular during the early 2000s when Dubai was carving a niche for itself in the property marketplace.
So rent-to-own schemes allow buyers to evaluate the opportunity at hand without having to make an immediate commitment.
The servicer must be able to work with multiple, unique and perhaps new third parties to manage a rent-to-own borrower and must also have the ability to build a custom borrower and delinquency management program.
largest developer, Aldar properties, is also introducing a rent-to-own option in an attempt to motivate sales of new homes at Raha Beach.
Summary: With a second property developer offering Rent-to-Own schemes, Kipp is wondering if the trend is finally catching on in the UAE?
Paul Middleton, executive director, Sales and Marketing, Sorouh, said: 'Sorouh's Rent-to-Own offer is a unique and very exciting initiative, and we are proud to continue to be the first to deliver innovative products to market for our customers.
Developers are already slashing prices and, in the case of the Decora and Northside Piers in Williamsburg, offering rent-to-own options that, if priced right, could be attractive to first-time buyers otherwise unable to scrape together a down payment.
Academic literature and court decisions are replete with calls to ban or severely inhibit the rent-to-own industry.
Most states have legislation regulating the rent-to-own business.