A Lease Purchase allows you to rent and occupy the home while having a contact to purchase at a future date. There are two documents that allow you to do that. A lease or rental agreement and then a purchase contact to buy the property at a future date. Lease purchase agreements vary so there is not a standard contact used by all. A lease purchase often refers to a contract for a certain purchase of the property. "Lease-options" are similar in that they often lock in the price of the home at the onset of the contract.
However with many lease options, you have the right to purchase the property by a certain date, but are not obligated to do so. Most often options money is non refundable in the case that you do not purchase the property. With current forecasts of growing home values, however, it's not surprising lease purchases and lease options today are gaining favor. Sometimes, these programs help first-time home buyers with credit and savings problems, to purchase their first home. As the buyer, some of the benefits may be that you will have minimum cash may be required, sometimes credit problems at the present are okay since sometimes the seller will finance you or if getting a mortgage loan you have time to repair your credit before you buy, you have faster equity growth than just renting, some of your money is working for you towards the purchase, the option money may be credit towards your purchase, you may have lower down payment at closing since you may have option money or rent credits to apply, prices may have appreciated beyond your lock in price, and you have time to check out the property while you live in it.
Every lease purchase or option is different, so you need to carefully read your contacts, because this is just a general description. And then, what is a Lease 2 Purchase Contract? Again, it's very easy. A Lease 2 Purchase contract combines a basic lease contract with an option to purchase contract, which creates a Lease 2 Purchase contract. The tenant/buyer pays to the landlord/seller a nonrefundable option deposit that is applied to the purchase price of the home. The tenant/buyer then pays to the landlord/seller rent to compensate the landlord/seller for the tenant/buyer's use of the property.
Rent payments are usually made on a monthly basis. A portion of that monthly payment is often applied to the purchase price and/or the down payment of the home. During the term of the lease, but before the option expires, the tenant/buyer has exclusive right to buy the home under the terms to which both parties have previously agreed. What's more important, you are in a position to make the Lease 2 Purchase option known to a select group of potential clients who would not qualify to purchase in any other way. They will remember the opportunity you have given them and reward you with future business.
At minimum, you have a fiduciary responsibility to determine whether a Lease 2 Purchase agreement could help them solve their real estate problems. It may be exactly what they need -and trust me- they will thank you for it!.
Nofie Iman is a business consultant, majoring at investment and strategic management issues. Click here to find out how to buy, sell and invest in real estate safer and easier with the Lease 2 Purchase contract.