Real Estate - Lease Purchase Contracts Are Becoming More Common
With Lease Purchase Contracts, the property holder| is permitted to lease or rent his property to the buyer till he closes. A Lease Purchase Agreement is usually used when the prospective buyer is keen to purchase the property but is not still ready or is competent to close quickly. Hence, with this agreement, the buyer can lease the property till he closes.
A Lease Purchase Contract allows the buyer to close somewhere around 12 to 24 months, however, the contract also allows the buyer to close it earlier. It is a negotiable contract where the maximum term period is open to discussion. This contract is helpful to the property holder as the customer has to fulfill one provision, that is, he has to make a non-refundable fee of 3% of the purchase price, this is called as purchase deposit. This money shall be further credited against the customer's down payment of the property. This money is a normal purchase deposit. Further, this purchase deposit amount can be negotiated between the customer and the property holder. This amount can be considerably higher or lesser and this is quite casual.
Majority of the property holders as well as the customer's bother about the instability of Purchase price of the property; they are confused whether they have to consider the purchase price of present value or the future value. Well, the buyers and property holders both prefer to fix the purchase price before hand. The buyer can close with loan or cash before the time limit mutually agreed by both in the agreement and the property holder in fact depends on the buyer for closing. Hence, if the property holder agrees to increase the time period of the agreement, the Lease Purchase agreement calls for rise in the purchase price.
A Lease Purchase Agreement is advantageous for both, the and the customer. It is beneficial for the buyer as he gets enough time to collect huge cash for the down payment, clear the previous dues or gets time to sell off some other possessions. Buyers also enjoy "forced savings plan" and this is as a portion of monthly rent is generally credited in the purchase price. The amount fixed for monthly rents can be negotiated between both the parties of agreement as per the rules of agreement. This agreement |is beneficial to the as they enjoy the present high market rates of the property because of the flexibility provided to the customer on the closing dates. But, there are chances that the monthly rentals may be higher than the market rents and also the customer has to tolerate all the costs of preservation and repairs of the property. This is so because, the customer is the future owner of the property and it is natural that the is relieved from paying mortgage on the property that is unoccupied.
Hence, a Lease Purchase Agreement is quite beneficial and secured for both the parties, that is, the customer and the in the agreement. But, every factor related to the property must be investigated thoroughly before both the parties sign the contract.
