Updated about 1 month ago on . Most recent reply
Lease Purchase vs Lease Option
Can someone explain the difference between a lease purchase and a lease option for me? I can't distinguish a difference between the two? There seems to be no definitive definition for either.
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#5 All Forums Contributor
- Plymouth, MI
The difference is in the difference of the names..."option" and "Purchase".
The lease option means the seller is obligated to sell the option buyer, at a given price, agreed to at the time of the signing of the option contract. The buyer of the option has the "option" to buy it,...they are not required to.
A Lease Purchase, means the buyer IS obligated to buy within the agreed upon time (usually a number of years) from the time of the Purchase contract.
In both cases, the seller has no options. The purchase price is agreed to and the buyer will buy the property within the agreed to time period (LP), or, the buyer "may", at their "option", buy the property within the agreed to time period. In both cases, the price is already agreed to at the time of contract.
With an option contract, the buyer isn't buying the property, yet. The buyer is simply buying an "option" to buy it.