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| The Real Estate Encyclopedia |
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| What is a Lease Purchase Agreement? |
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| Category - Home Ownership FAQ's - Lease & Renting
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A lease purchase agreement is an agreement under which a portion of the rent money is applied toward a set purchase price. Title to the property is transferred from the lessor or property owner to the lessee when the lessor receives the prearranged total purchase price for the property.
Typically, two documents are signed when lease purchasing a property. One document covers the lease agreement and the other the purchase terms. If the lease-purchaser fails to complete the purchase portion of the transaction within the specified term, the property owner retains ownership of the property and the lessee forfeits any funds invested in the property. It is advisable to carefully read all the terms of the both agreements. |
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