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Lease to Own Contract

Did you know that it is possible to have a that allows the tenant to have an option to purchase the property from the landlord in a specified time? Here is an overview of how this agreement works and template for a lease to own that will help you understand the main points of the contract.
Tulika Nair
Most of us are used to being signatories to documents drafted when a landlord leases out his house to a tenant. These agreements are important to define the rent and other obligations that both the landlord and the tenant are under. But did you know there is a type of lease agreement that allows to make use of the lease option to buy home. This agreement is known as the lease to own contract and is a popular way of buying and selling property. A proper and well drafted rent to own contract ensures that many legal issues that may crop up are bypassed.

A lease with an option to buy in simple terms allows the tenant to buy the property from the landlord in a specific period at a specified price. This agreement is combined with a lease agreement and every month the buyer pays a premium towards the purchase price. The buyer also pays an option fee when the agreement is signed towards the purchase price. These agreements have to be drafted properly which is why it is important to take proper legal advice and consult a real estate lawyer. These contracts were extremely popular in the '70s and the '80s when alienation clauses in mortgage agreements were huge hassles. Today these forms are definite financing documents that have state-specific laws governing it.


It is important that you get an attorney to draft this contract for your purposes. Alongside, you can also take a look at a template that will give you the format.

The Lease to Purchase Agreement made herein is signed between the Seller or Landlord name of landlord and the Buyer or Tenant name of tenant on date on which agreement is signed.

The Landlord is the owner of the premises or property located at address of property and the Landlord and the Buyer have together decided to execute a lease agreement for the property which is aforementioned.

In consideration of certain obligations mentioned herein, agreed upon by both parties, the Landlord grants to the Buyer the option to purchase the aforementioned property. The conditions for the same are agreed upon herein:
  1. The period for option to purchase starts on date on which option starts and terminates on date on which this exclusive offer ends.
  2. In order to execute the option to purchase the Buyer has to provide the Landlord with an intent to purchase in written with a date on which this option expires. This date should be before the lease termination date of the original lease agreement.
  3. In order to execute this option to purchase agreement, the Buyer agrees to pay the Landlord a non refundable fee of amount, for which the Landlord will provide a receipt. This amount will be credited as part payment for purchase price in case the Buyer decides to execute the option to purchase. In case the buyer defaults on the lease agreement, then the fee will not be refunded to the Buyer.
  4. The purchase price of the premises is USD mention the amount. This is in case the buyer decides to execute the option to purchase. In case the Buyer has not defaulted on the lease agreement, then the Landlord will set aside a sum of USD mention the amount from the lease payment towards the purchase price.
  5. This option to purchase is an exclusive agreement and valid only for the signatories of the agreement. The Buyer cannot assign or convey this option to purchase to any third party without the written consent of the Landlord.
  6. The Landlord does not make any representation or warranty for availability of financing for this option to purchase. The Buyer is solely responsible for obtaining financing. Obtaining financing is not a condition of performance to execute this option to purchase.
  7. In case the Buyer defaults on the lease agreement or under the option to purchase agreement, then the Landlord holds the rights to terminate the option to purchase by giving a written notice. The Buyer has to comply with all the terms and conditions mentioned in this option to purchase agreement.
  8. This option to purchase agreement has be signed by both parties voluntarily without any sort of duress. The parties understand the terms and conditions and agree to all of them. An attorney of their choice has been consulted before signing this option to purchase agreement.
  9. This option to purchase agreement is governed under the laws of the state of mention the name of the state. Any disputes will be solved at venue for solving disputes.
This document is the entire agreement understood and signed by both the parties relating to the subject matter and supersedes any previous agreement between the parties. No amendment to this option to purchase agreement will be considered unless in writing signed by the party to be charged.



As a buyer it is important to be cautious as this a kind of agreement that is generally agreed to by owners whose properties are hard to sell. But if the property you are looking at is your dream home and financing is a problem then a lease contract with option to buy may be a brilliant solution. Such a contract may initially seem like a more expensive option because the lease payments tend to be higher than market rent. But the fact of the matter is that with appreciating real estate properties in the long run, a lease to own contract for a property works out in the buyer's favor, with a property that will appreciate beyond the purchase price.