Lease purchase Agreement is, in a way, quite simple. It means to purchase a property on lease. The implied meaning of lease is to enjoy the possession of a property which is originally owned by someone else. So, a purchase contract that is affected through a lease contract or in conjunction with a lease agreement is known as a lease purchase agreement. However, due to the lengthy procedure and long list of terms involved people have a general misconception about the compactness of the whole transaction when it comes to lease purchase. But the success of this exclusive buying option is making the scene far clearer for most of the people. There are several real estate agents and legal firms that specialize in lease contracts of different nature. Lease purchase is a quite wide term and it is not confined only to real estate industry. Several companies and business organizations practice lease purchase for procuring various licenses, machineries, factories, buildings, shops and office spaces. In reality lease was primarily associated with the corporate world but over a period of time lease purchase conquered the market of real estate and property business too.
In a lease purchase agreement two parties involved are the tenant (prospective buyer) and the property owner (prospective seller). The contract of lease allows for concession in terms of time and money to both the buyer and the seller wherein the former benefits in terms of time and the later benefits in terms of higher rates for the property being let. Lease purchase of a property or a house involves registration of two legal agreements, one is the agreement of real lease or the rental agreement and the other one is the agreement of purchase wherein the tenant agrees to the option of buying the property leased on a future date at a fixed rate payable through a fixed mode on payment. This rate that includes both the rent as well as the entire sum payable for the ownership in property along with the terms and denomination of installments is fixed in advance or at the time of entering the contract. The duration of the contract may vary from months to years. It varies for each contract and is determined as per the mutual agreement between the buyer and the seller. However, in case of real estate deals, lease purchase agreements go on for several years depending on the cost of the property being leased or sold.
Even though it is advertised that lease agreements are more beneficial for the buyer, the long term benefits of such contract is also well shared by the owner or the seller. The owner of the property might not be able to enjoy a larger sum while letting the property on lease but over the period of agreement until the conclusion of the contract, the owner derives higher value for the property being sold. However if there is a high demand in the real estate market at the time of the execution of the purchase deal, then the buyer benefits far more than the seller as he gets to own a property at a comparatively lower market value.