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 ?
Your Home in Wales, our new website, will provide people with information on the Rent to Own - Wales and Shared Ownership Wales schemes and help them to decide which of the two schemes can help them get on the housing ladder.
For a limited time, the book will be available for free from the Rent To Own Wealth website.
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.
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.
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Try Before You Buy It with Rent to Own, GOLD COAST SUN (Austl.
5million in the pilot Rent To Own scheme that allows customers to rent a new home of their choice for up to three years and at the end of the rental period, they will receive a rent rebate of 25% towards a mortgage deposit to purchase the home through Co-Ownership or through a traditional mortgage.
Emaar also announced an attractive special offer for Rent To Own customers who convert to ownership by the end of September.
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.