A lease plus agreement is a type of leasing contract that allows a lessee to rent a property for a certain period of time, usually a year or more, with the option to purchase the property at the end of the lease term. This type of agreement is also known as a lease with option to buy, or a lease-option agreement.
The lease plus agreement is often used in a real estate transaction where the buyer is not able to obtain a mortgage loan due to credit issues, or a lack of funds for a down payment. This can be a great alternative for someone who wants to eventually own a property but needs time to improve their finances.
Under this agreement, the lessee pays monthly rent as well as an additional amount, known as the “option fee,” which gives the lessee the option to purchase the property at the end of the lease term. The option fee is usually a percentage of the purchase price, and it is typically non-refundable.
In a lease plus agreement, the purchase price of the property is agreed upon at the beginning of the lease term. This is beneficial for the lessee because if the value of the property increases during the lease term, they can still purchase it at the original agreed-upon price. However, if the value of the property decreases, the lessee is not obligated to purchase the property and can simply walk away at the end of the lease term.
One thing to keep in mind when entering into a lease plus agreement is that it is important to carefully review the contract and understand the terms and conditions. It is also a good idea to have a real estate attorney review the agreement to ensure that everything is fair and legally binding.
In conclusion, a lease plus agreement can be a great option for someone who wants to eventually own a property but needs time to improve their financial situation. It is important to carefully review the contract and seek legal advice to ensure that the agreement is fair and legally binding.