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 ?
"Newer concepts like rent to own and long-term payment plans are the result of market cycles.
Talal Al Dhiyebi, Aldar's chief executive officer, said the developer was launching the scheme in West Yas to "enable customers to build ownership in their homes over time", noting a "real demand for rent to own scheme at communities like West Yas".
Commenting on the scheme, CEO Talal Al Dhiyebi said: "We are launching this specific rent to own scheme in West Yas to enable customers to build ownership in their homes over time and live in this stunning community."
Aldar Properties PJSC ('Aldar'), today announced that it is launching a new rent to own scheme for a limited number of homes in its popular West Yas community overlooking the natural mangroves that surround Yas Island.
Head of Policy atStepChange,a debt charity, Peter Tutton said: "We are pleased that the FCA is addressing rent to own, where the high cost of goods and add-on warranties can make agreements expensive even compared to other types of high cost credit.
Contract: con-18-097 high cost credit - rent to own consumer research
Co-Ownership is also trialling 'Rent to Own', another way into homeownership for firsttime buyers in Northern Ireland.
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.
Mr Clegg said yesterday how his rent to own programme would see first-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.
Now, Rent-to-Own Schemes aren't new to the UAE; as far back as 2004 Tamweel was offering a variety of home financing products along these lines, including the 'Flexi Rent to Own' and 'Fixed Lease to Own' option.