A lease purchase is a document which is a lease with an option to purchase. When the lessee forms a contract with the lessor, stipulating the terms and conditions governing the lease of an apartment for a certain period of time, sometime a clause is inserted in the document which states that the lessee can buy the apartment at the end of the duration of lease, at a revised rate [considering all the money he has already invested into the property during the period of the lease].
- A lease purchase does not necessarily compel the lessee to buy the property leased at the end of the duration of lease. If conditions do not allow, the lessee can always opt out of buying the property. However, in most cases, it is a verbal given that the property shall be purchased by the lessee after the duration of the lease contract is over.
- A lease purchase is a legal document with clauses which define the transaction between the lessor and the lessee while the lease is in effect. Hence the terms and conditions must be read carefully so that there is no ambiguity and both lessor and lessee are aware of the exact nature of the lease purchase contract.
- The lessee is required to provide a non-refundable security deposit to the lessor before the duration of his lease. This money is subtracted from the sales price of the house. Similarly, the monthly rental which the lessee paid the lessor over the period of the lease is often adjusted as well.
- A lease purchase provides benefits to both lessor and lessee. While it ensures the lessor of a buyer for his property, it allows the lessee to live in the property before he actually purchases it. The lessee is also able to purchase the property at a much lower rate.