Typical Terms Lease Purchase Agreement

A lease purchase agreement is a legal document that outlines the terms for leasing a property with an option to purchase it in the future. This type of agreement is common in real estate transactions, especially when a buyer is not able to secure traditional financing.

If you`re a landlord or tenant looking to enter into a lease purchase agreement, it`s important to understand some of the key terms that are typically included in these agreements. Here are a few to keep in mind:

1. Option fee: This is a non-refundable fee paid at the beginning of the lease purchase agreement that gives the tenant the option to purchase the property at a later date. This fee is typically 1-5% of the purchase price.

2. Purchase price: The purchase price is the amount the tenant will pay to buy the property at the end of the lease term. This price is typically negotiated at the beginning of the lease purchase agreement and is often based on current market conditions.

3. Rent credits: Rent credits are typically included in lease purchase agreements and are a portion of the tenant`s monthly rent payments that are applied towards the purchase price of the property. These credits can be structured in a variety of ways, so it`s important to understand the specifics of your lease purchase agreement.

4. Term: The term of the lease purchase agreement specifies the length of time that the tenant has to exercise their option to purchase the property. This is typically one to three years, but can vary depending on the specifics of the agreement.

5. Maintenance responsibilities: The lease purchase agreement will typically outline who is responsible for maintaining the property during the lease term. This can include things like lawn care, repairs, and general upkeep. It`s important to clearly define these responsibilities to avoid any confusion or disputes.

6. Default: Finally, the lease purchase agreement will typically include language outlining what happens if either party defaults on the agreement. This can include penalties, termination of the agreement, or other consequences.

Overall, a lease purchase agreement can be a great option for both landlords and tenants. By understanding the typical terms that are included in these agreements, you`ll be better equipped to negotiate a fair and beneficial agreement for all parties involved.