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 ?
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.
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.
The beauty of rent-to-own of course, is the lump sum spent over the
Those opting for the Rent-to-Own scheme will be allowed to rent a unit for up to two years, after which the tenant will be allowed the opportunity to either purchase the apartment or walk away from the agreement penalty free.
Recently, four rent-to-own purchasers have closed on their homes at Ore, and three more have scheduled closings.
Tatiana Harris, head of business development for Harlem Lofts, said that after her firm introduced the rent-to-own option at Harlem's 764 Saint Nicholas Avenue, it reduced rents up to 20 percent before all the units were occupied.
Union Properties (UP), one of the leading property developers in the UAE, is offering flexible leasing and buying opportunities for its residential and commercial properties by giving potential residents and businesses the option to rent, own or rent-to-own.
Most states have legislation regulating the rent-to-own business.
Rent-to-own contracts are subject to New Jersey's Retail Installment Sales Act (RISA), the interest rate cap in its criminal usury statute, and the Consumer Fraud Act, the state supreme court has held, reversing a lower court's decision.
Through rent-to-own programs, apartment owners afford residents a savings vehicle for a down payment on the purchase of a home while enticing them to remain a renter at their community until purchase.