What is the purpose of a lease purchase agreement?

A lease purchase agreement is specifically designed to allow a tenant to lease a property with the intent to purchase it after a specified period. This type of agreement combines elements of both leasing and purchasing, providing the tenant with the right to buy the property at the end of the lease term, usually at a predetermined price.

This arrangement is particularly beneficial for buyers who may not currently qualify for a mortgage or who want to lock in a purchase price while they build credit or save for a down payment. The lease payments often contribute to the purchase price, making it an attractive option for those looking to eventually own that property.

In this context, while aspects like tax avoidance or immediate ownership sound plausible, they do not accurately define the primary purpose of a lease purchase agreement. Likewise, short-term rentals would not typically involve a commitment to buy, which is a key element of lease purchase agreements. This makes the identification of the correct purpose essential in understanding how lease purchasing operates within real estate transactions.