Lease/Purchase contract is similar to lease with option to buy. It is a combination of rental with an option to buy the property. The contract is used by the owner who wants to buy a house but is unable to do so, due to financial constraints. Bank and lending agencies reject mortgage due to reasons like bad credit ratings, poor savings, bankruptcy, employment status etc. Lease purchase is the best option for those who are sidelined by banks. The buyer needs to select a property that offers lease purchase. Such properties are available online or you can contact a real estate agent who specializes in lease properties. Two things have to be considered while opting for lease purchases, one is the term of the lease and the next is the price for which the house will be purchased. The tenant should pay a non-refundable option deposit to the owner that goes towards the purchase price of the property. Apart from this deposit amount a monthly rental also is paid to the owner.

The landlord has all the right to extend the lease period in case the tenant is unable to arrange for the money. The landlord also can change the lease purchase agreement to a rental agreement on the request of the tenant. Likewise, the owner also can vacate the tenant if he is unable to clear the payment as soon as the lease period is over. The difference between lease option and lease/purchase is that the former is a unilateral contract whereas the later is a bilateral contract. A lease option was used primarily to avoid estranged clauses in the mortgage. The lease option, lease purchase and option to purchase are all different agreements and differ from state to state. It is recommended to take the advice of a real estate agent before entering into an agreement.

The buyer should pay a deposit to the seller for exercising the right to buy the property. The money should be a substantial amount. Both parties should agree on a purchase price, the value of the property is normally placed higher than the market value. The seller rents the property to the buyer for a prearranged rental amount. The terms and conditions stated in the agreement are negotiable. The period of contract is normally between one to three years. This period gives sufficient time for the buyer to apply for loan and settle the amount quickly.

The deposit amount is non refundable and does not apply to the down payment. Part of the monthly lease amount can be applied towards the value of the property. The property can be bought only by the tenant and nobody else can buy the property unless he defaults. The buyer is responsible for the maintenance of the property, repairs, tax and insurance. The lessee should make all arrangements to buy the property. A legal hand is imperative to draw the agreement. The agreement should contain possession rights and default consequences. Even though agents can complete the drafting it is advised to opt for a lawyer to draft the lease/purchase agreement.