Lease Option Agreement

What is a Lease Option Agreement?

A Lease Option Agreement, also known as "Rent-to-Own," is a contract where a tenant has the option to purchase the property they are renting at the end of the lease term.

The agreement specifies the purchase price, the duration of the lease, and any portion of the rent that will be credited toward the purchase price if the tenant decides to buy the property.

What are the benefits of creating a Lease Option Agreement?

For Tenants:

Flexible Homeownership: A lease option agreement allows tenants who may not be ready to purchase a home right away to move towards homeownership at their own pace.

Financial Preparation: It can provide the tenant more time to save for a down payment, improve their credit score, or stabilise their income before taking on a mortgage.

Price Lock: The purchase price is usually agreed upon at the start of the lease, protecting the tenant from market price increases.

For Property Owners:

Steady Income: Owners can ensure a steady income stream while the tenant is preparing to buy.

Potential Buyers: The contract attracts tenants who are serious about homeownership, potentially reducing turnover.

Maintained Property: Tenants who plan on owning the property are likely to take good care of it.

For Both Parties:

Flexibility: The tenant is not obligated to purchase the property at the end of the lease, providing flexibility for both parties.