What is a lease purchase?

A lease purchase refers to an arrangement where a lease agreement is established with the intent to purchase the property at a later date. In this scenario, the tenant typically pays rent for a specified period, and a portion of that rent may be credited toward the eventual purchase price. This arrangement allows tenants the opportunity to invest in the property they are leasing, giving them time to secure financing or make other preparations necessary for an eventual purchase.

The key element that defines a lease purchase is the combination of leasing and the commitment to buy, distinguishing it from standard rental agreements where no such purchase intent exists. In outright sales or transfers, or in standard rental agreements without purchase options, there is no such dual purpose, emphasizing the unique nature of a lease purchase agreement.