The Terms in the Lease Purchase Agreement
The Lease Purchase Agreement comes under the category of the popular real estate deals.
This agreement helps not only the rich people but also the low budget buyers to become the homeowners.
It is required that the parties interested to start such an agreement should be well aware of all the terms used in this agreement.
The terms used in this agreement are explained below.
Lessee The Lessee is the buyer or the tenant who pays fixed rent as decided in the agreement.
If the lessee successfully completes the payment part at the time of contract expiry then the ownership of the property transfers from the seller to the lessee.
Option fee It is the initial amount of money paid by the lessee to the homeowner.
After the option fee is paid to the seller or the homeowner, he gives permission to the lessee to live.
Option fee is also called as the lease amount.
Option fee is also the risk amount for the lessee because if the lessee does not successfully complete the final payment then this will not be refunded back to him.
Lease period The lease period is the amount of time given to the lessee with in which he will have to arrange the payment of the property.
The lessee will be required to complete the payment part at the end of the lease period and if he fails to do so then he will not be allowed to use the property neither as the owner nor as the lessee.
However the lessee may get additional time to manage the balance payment if the seller agrees to do so but it will only be the choice of seller.
The lessee can request the seller to extend contract expiry date but if the seller refuses to do so then he cannot be legally compelled for it.
Lease Purchase The lessee is allowed to use the property of the seller by for the fixed time period by paying the lease amount or the option fee.
After the fixed time period will get over, the lessee will be able to purchase the property by paying the balance payment.
This clause is the purchase option that should be added to every lease purchase agreement.
The presence of purchase option at the end of the lease period completes the meaning of this type of agreement and in absence of the purchase option; this agreement will only act as the rental agreement.
This agreement helps not only the rich people but also the low budget buyers to become the homeowners.
It is required that the parties interested to start such an agreement should be well aware of all the terms used in this agreement.
The terms used in this agreement are explained below.
Lessee The Lessee is the buyer or the tenant who pays fixed rent as decided in the agreement.
If the lessee successfully completes the payment part at the time of contract expiry then the ownership of the property transfers from the seller to the lessee.
Option fee It is the initial amount of money paid by the lessee to the homeowner.
After the option fee is paid to the seller or the homeowner, he gives permission to the lessee to live.
Option fee is also called as the lease amount.
Option fee is also the risk amount for the lessee because if the lessee does not successfully complete the final payment then this will not be refunded back to him.
Lease period The lease period is the amount of time given to the lessee with in which he will have to arrange the payment of the property.
The lessee will be required to complete the payment part at the end of the lease period and if he fails to do so then he will not be allowed to use the property neither as the owner nor as the lessee.
However the lessee may get additional time to manage the balance payment if the seller agrees to do so but it will only be the choice of seller.
The lessee can request the seller to extend contract expiry date but if the seller refuses to do so then he cannot be legally compelled for it.
Lease Purchase The lessee is allowed to use the property of the seller by for the fixed time period by paying the lease amount or the option fee.
After the fixed time period will get over, the lessee will be able to purchase the property by paying the balance payment.
This clause is the purchase option that should be added to every lease purchase agreement.
The presence of purchase option at the end of the lease period completes the meaning of this type of agreement and in absence of the purchase option; this agreement will only act as the rental agreement.
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