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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Kern's HB2598 would require any future debt refinancings on the lease-purchase agreements the state entered into nearly a decade ago to go before the Joint Committee on Capital Review a 14-member committee made up of state lawmakers from both chambers.
Lease-purchase agreements are by no means unheard of, but the one that exists between NCTC and GENAVCO is indicative of a shifting mindset in the Middle East.
However, even the biggest players are unable to anticipate demand in the longer term; another reason why lease-purchase agreements appeal to so many contractors, according to Nadeem.
The energy services company industry has never penetrated the commercial building market due in part to the leasing problem, but, even more fundamentally, because they rely on lease-purchase agreements and other forms of equipment finance that are impossible for commercial owners to accept.
This article introduces energy performance contracts and the corresponding benefits of using tax-exempt lease-purchase agreements as the underlying financing vehicle.
Retroactive Legislation, Advanced Ruling Fees, and GST Consequences of Lease-Purchase Agreements Attract TEI Scrutiny
Under its lease-purchase agreements with New York City, UNICEF would save about $170 million over the next 30 years, Boakes estimated.
Lease-purchase agreements are written in all sizes from $5,000 to millions of dollars.
Lease-purchase agreements flow naturally into these university programs.
TEI believes that the policy statement has broad ramifications not only for lease-purchase agreements with Indians, but also for lease-purchase agreements where possession of the property is initially given to the lessee outside Canada.