Rent to Own Purchase Agreement Templates

A lease-purchase agreement combines a standard lease with an option for the tenant to buy the property, often at a pre-agreed price. It’s usually used with homeowners looking to rent their property with the potential to sell to the tenant.

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Last updated November 17th, 2024

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A lease-purchase agreement combines a standard lease with an option for the tenant to buy the property, often at a pre-agreed price. It’s usually used with homeowners looking to rent their property with the potential to sell to the tenant.

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By Type (2)

There are two types of Lease-Purchase Agreements:

  1. Option to Purchase: The tenant can choose to buy the property at any time during the lease period.
  2. Lease-Purchase: The tenant must buy the property by the end of the lease period, usually at a predetermined price.

By State

Alabama

Rent-to-Own Process Steps

Negotiate the Rental Terms

Landlord and tenant must agree on the following:

  • Monthly Rent
  • Lease Term
  • Security Deposit
  • Utilities and Services

The Option to Purchase Terms

After finalizing rental terms, decide:

  • Purchase Price
  • Downpayment
  • Option Term
  • Option Fee (if any)

The lease-purchase terms often include a condition that both parties agree to enter a purchase agreement in “good faith.”

Screen the Tenant

Verify Tenant Income

The tenant provides:

  • Bank Statements (last 2-3 months)
  • Pay Stubs (last 2 weeks)
  • Tax Returns (last 2 years)
  • Employment Verification

Sign the Lease with Purchase Option

Both parties sign the agreement. Tenant provides:

  • First Month’s Rent
  • Security Deposit
  • Prorated Rent (if applicable)
  • Additional Fees (pet fees)

Tenant Moves In

Tenant moves in per the lease start date, introduces themselves to neighbors, and follows property rules.

Activate Purchase Option

Tenant informs the landlord of their intent to buy, often with an earnest money deposit.

Enter a Purchase Agreement

Parties agree on:

  • Financing Contingency
  • Inspection Periods
  • Repair Negotiations
  • Property Survey
  • Closing Date

Include Required Disclosures

Seller provides disclosures about property defects and includes the Lead-Based Paint Disclosure (if built before 1978).

Close the Sale

Closing the sale includes the following:

  • Making sure the Buyer funds are available, transfers payment, and receives the deed.
  • The deed is recorded at the county office, officially transferring ownership.

 

Sample Lease to Purchase Option Agreement PDF Template