When a property owner and an individual who has the option of purchasing the property at the end of the lease period, comes to an ordinary lease agreement, this agreement is called a Lease Purchase Agreement. This system was regularly used for the acquisition of property some time ago but was either forgotten or ignored during the real estate boom. However, due to the recent slump in the property market, this option has been revitalised and is fast becoming more popular in real estate circles.
This agreement has to be in written form and the document has to be agreed upon by both parties. Like all legal documents there is a protocol involved. Therefore, a contract has to be drawn up and signed by both the property owner and the person (from hereon refers to as the lessee) who wishes to use the property. This contract is what now becomes the Lease Purchase Agreement. The services of a lawyer are usually retained by both the property owner and the lessee to word the document and oversee and explain the legal angles.
While it is difficult to draw up a contract without biases between two opposite parties (property owner and lessee), there are certain criteria that a good Lease Purchase Agreement should have. The location, size and boundaries of the property should be clearly stated. The size of the property and its location affects the cost. The boundaries are important in that properties do not have definitive shapes and therefore may not be suitable for the lessee intended use. Of utmost importance, make sure the property is free of financial liabilities (that there is no lien on the property). No agreement should be entered into without first agreeing on the definitive sum of money to be paid and the time frame in which it is to be paid.
It is also important to take into consideration that circumstances can and may change before the final date and how much one stands to gain or lose if the deal falls through. Both parties should have an agreeable exit clause drafted in the final document. Finally, make sure that the document is dated and witnessed by a third independent party or a third party on each side.
All the aforementioned details should be taken into consideration if you plan to enter in to any such agreement, because you have to protect yourself and the other party also have to protect them selves. There are templates for these types of agreements found online and more details that will give an insight as to the legalities and how to go about getting everything done. It will then be up to you to make that lease agreement your own to match your needs.