How is a lease purchase agreement structured?

A lease purchase agreement is structured to enable tenants to rent a property with the option to buy it later. This arrangement generally involves a long-term lease with an agreed-upon purchase price that is set in advance. Often, a portion of the rent payments may be applied toward the down payment if the tenant decides to exercise the purchase option by the end of the lease term.

This structure is advantageous for both landlords and tenants. For tenants, it provides the opportunity to live in the property and build up equity while also delaying the full purchase, which can be beneficial if they need time to improve their financial situation or credit score. For landlords, it creates a selling opportunity, potentially ensuring their property is occupied and maintained during the lease period.

The other choices do not accurately represent the structure of a lease purchase agreement. A requirement to buy before leasing does not allow tenants any flexibility, whereas prohibiting rental agreements until purchase and offering fixed rental prices regardless of market conditions do not align with the nature of a lease purchase, which inherently includes a leasing phase as part of the purchasing process.