A lease purchase agreement is a lease combined with a binding contract to buy. It looks similar to a lease to own deal, but it carries a stronger commitment. Instead of a right to buy, the buyer has an obligation to buy at the end of the term. That difference changes the risk for both sides.

Lease purchase versus lease option

• Lease option: the buyer may buy but does not have to. If they walk away, they usually lose the option fee.
• Lease purchase: the buyer must buy at the end, and the seller may have remedies if they do not close

Our page on lease to own covers the option version. This page covers the version with a firm obligation.

Terms to negotiate

• The purchase price, or how it will be set
• The deposit and what happens to it if the sale does not close
• Monthly rent and any portion credited toward the price
• Who pays for repairs, taxes and insurance
• What happens if the buyer cannot get a loan, and whether the contract has a financing contingency
• The closing date and the steps required to close

Risks to understand

• A buyer who cannot qualify for financing by the closing date may face serious consequences under the contract
• A seller whose mortgage still exists must keep paying it, and their own lender’s terms matter
• Court and title issues can arise if the parties disagree

Use an attorney, and be conservative

Because the buyer is committed to buying, this structure deserves careful legal review on both sides. A Georgia real estate attorney should draft the documents and explain them. Talk to Nil about approved lenders so you know what you can qualify for before you sign.

We work with buyers and sellers across Atlanta, Brookhaven, Decatur, Duluth, Ellenwood, Griffin, Hampton, Lawrenceville, Lilburn, Locust Grove, McDonough, Norcross, Snellville, Stockbridge, Stone Mountain and Tucker.

Nil Patel is a licensed Georgia real estate salesperson with Keller Williams Realty Atlanta Partners. This page is general information, not legal, tax or financial advice, and nothing here is a commitment to lend. Talk to a lender and a real estate attorney about your own situation. Creative financing structures can carry legal, tax and lender-consent risks. Talk with a real estate attorney before you proceed with a subject-to, wrap-around, lease option, lease purchase or seller-financed purchase.