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 ?
Using a performance contract and corresponding lease-purchase agreement to finance the purchase of assets may allow the repayment to be treated as an operating expense.
Under a lease-purchase agreement, TCP Management will develop the library, expected to take 18 months for construction and to open early in 2001.
Presta's innovative lease-purchase agreement allows customers to order products for immediate delivery without paying the entire cost of the product up front.
This project is proposed to be completed in FY2017 and is proposed to be funded through a lease-purchase agreement through the Virginia Resources Authority.
Once the master lease-purchase agreement has been negotiated, the lessee has the ability to expeditiously access additional financings through takedowns under the master lease agreement by simply executing a set of schedules and exhibits to the master lease agr eement.
The county leases two of the planes each year, and the legislators are considering a lease-purchase agreement for two to four additional planes, said Laurie Golden, a spokeswoman for the Valley Industry and Commerce Association.
According to Bob Medlock, the expansion project began immediately after NCI successfully negotiated an accelerated buyout of its lease-purchase agreement with American Buildings Co.
The essential nature of leased projects enhanced by a master lease-purchase agreement, which requires the district to appropriate lease payments on an all-or-none basis, is also a credit factor.
Net pledged revenues are net solely of the authority's administrative costs because all operating and maintenance expenses of the bridge will be paid by the Florida Department of Transportation pursuant to a lease-purchase agreement between the authority and the state.
The essential nature of leased projects enhanced by the master lease-purchase agreement, which requires the district to appropriate lease payments on an all-or-none basis, is also a credit factor.
The 2008A certificates are the fourth under the master lease-purchase agreement to be issued by the Corporation and will be used to expand the recently constructed Graceville facility located in Jackson County.