What is a lease-purchase agreement?

A lease-purchase agreement is an arrangement where a tenant can rent a property with the option to purchase it at a later date. This type of agreement typically involves the tenant paying rent that may contribute toward the purchase price, providing an opportunity for the tenant to save for a down payment or resolve any credit issues that may prevent them from purchasing outright initially.

This arrangement is beneficial for both parties: the tenant gains the chance to own a property while living in it, and the seller might secure a buyer for their property in the future. The agreement outlines the terms under which the tenant can exercise the option to buy, including the purchase price and time frame for the option.

In contrast to the other options, which describe other types of real estate contracts or arrangements, a lease-purchase specifically integrates the rental and purchasing elements, making it distinct in how it allows for future ownership while providing immediate housing. For example, options that suggest exclusive leasing or mere investment opportunities do not encapsulate the dual nature of leasing with a purchase option that is characteristic of a lease-purchase agreement.