Add Up Articles Directory | Free Articals | New Articles Daily | Real Estate - Lease Purchase Contracts Are Becoming More Common

With Lease Purchase Contracts, the property holder| is allowed to lease or rent his property to the buyer until closing. A Lease Purchase Agreement is generally used when the prospective purchaser is keen to buy the property but is not yet prepared or is capable to close immediately. Thus, with this contract, the purchaser can rent the property until he closes.

A Lease Purchase Contract lets the purchaser to close somewhere between 12 to 24 months, anyways, the contract also lets the purchaser to close it earlier. It is a negotiable contract where the maximum term period is flexible. This contract is favorable to the property holder as the buyer has to satisfy one provision, that is, he has to make a non-refundable payment of 3% of the purchase price, this is termed as purchase deposit. This amount will be further credited against the buyer's down payment of the property. This amount is a normal purchase deposit. However, this purchase deposit amount can be negotiated between the buyer and the property holder. This amount can be considerably greater or lower and this is quite common.

Majority of the sellers as well as the buyer's worry about the fluctuations of Purchase price of the property; they are jumbled whether they have to consider the purchase price of present worth or the future value. Well, the customers and property holders both prefer to decide the purchase price before hand. The buyer can close with loan or cash before the time limit jointly agreed by both in the contract and the property holder actually relys on the buyer for closing. Thus, if the property holder agrees to increase the term of the contract, the Lease Purchase agreement calls for rise in the purchase price.

A Lease Purchase Agreement is advantageous for both, the property holder and the buyer. It is beneficial for the buyer as he gets enough time to gather huge cash for the down payment, clear the previous bills or gets time to sell off some other property. Customers also enjoy "forced savings plan" and this is as a part of monthly rent is usually credited in the purchase price. The amount set for monthly rents can be negotiated between both the parties of contract as per the terms of agreement. This contract |is beneficial to the property holder as they enjoy the current high market prices of the property due to the flexibility provided to the buyer on the closing dates. But, there are chances that the monthly rentals may be higher than the market rents and even the buyer has to tolerate all the costs of preservation and repairs of the property. This is so because, the buyer is the future owner of the property and it is natural that the property holder is relieved from paying mortgage on the property that is unoccupied.

Thus, a Lease Purchase Agreement is quite beneficial and safe for both the parties, that is, the buyer and the property holder in the contract. But, each factor related to the property should be examined properly before both the parties sign the deal.