On the surface, the lease with purchase option is exactly like renting an apartment or house. The prospective buyer occupies the subject property and makes rental payments to the owner.
However, the lease will contain a clause giving the renter-buyer an option to buy the property—usually at a predefined price within a predefined period. If the buyer does not exercise this purchase option, then the agreement remains a standard lease rental contract. This purchase option will have a time limit, usually one to five years. The prospective buyer must complete the purchase of the property within this specified period.
The buyer exercises this option by obtaining the funds or mortgage financing to buy the property from the seller. The lease with purchase option offers significant advantages for the buyer:
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