What is a lease purchase agreement?

A lease purchase agreement is a type of contract used in residential real estate law in Delaware. It combines a rental agreement and a purchase agreement because it involves both the tenant renting and the tenant buying the property. The tenant will pay an agreed-upon monthly rent amount to the landlord, as with a typical rental agreement. A portion of the rent payment each month will go towards a down payment and be saved as “rent credit”, which will be used to make the purchase of the property more affordable. At the end of the lease purchase agreement, the tenant will have the option to purchase the property using the rent credit saved, as well as any additional funds they may have saved. The tenant may also decide not to purchase the property, in which case they will need to return the “rent credit” saved to the landlord, and the landlord may use it as a down payment to purchase the property. Lease purchase agreements are often used when other financing options are not available, or when the tenant wants to purchase the property but cannot currently obtain financing due to credit or income challenges. It can also be a good option for tenants who want the flexibility to decide whether or not to purchase the property at the end of the agreement.

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What is a lease purchase agreement?

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