Lease purchase contract

This contract should describe any option fee and how much of the monthly payment will be credited to the down-payment for the purchase of the home at the end of the lease.

The lump sum accrued from the initial deposit and the rent credit are only released to the buyer as down-payment on the house should the tenant/buyer decide to proceed with the purchase.

Should the tenant/buyer be unable to purchase the house due to a lack of financing, the tenant and landlord can agree to extend the option period, convert the lease purchase contract into a traditional rental agreement, or end the contract with the tenant moving out and the landlord seeking other renters or buyers.

[4] Lease-purchase contract agreements may meet the needs of a buyer and seller in a manner that cannot be accomplished through a traditional credit transaction.

For example, lease-purchase contracts are popular with buyers who have poor credit scores, lower savings for down payments, or people who cannot qualify for a traditional loan at the time they need to acquire property.

There are exemptions under this federal law for homeowners financing their primary residence, those in the business of real estate such as landlords are considered dealers.

[2] Commercial loan arrangements are exempt from the Dodd-Frank Act, as a landlord might rent to own a property for the purpose of sub-letting to a tenant.