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Lease Option Purchase

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Lease of Unfurnished House with Option to Purchase

Lease agreement made the between

, of , hereinafter called Landlord, and

, of , hereinafter called Tenant.

1. Grant of Lease

Landlord leases to Tenant and Tenant leases from Landlord the personal residence located at , and being more particularly described in Exhibit A attached hereto and made a part hereof, said residence as described therein being hereafter referred to as the Premises.

2. Terms of Lease

This Lease shall commence on and extend until the residence has been purchased by Tenant, but in no case shall continue beyond without written execution of a lease extension.

3. Rental Payments

Tenant agrees to pay to Landlord as the rent the sum of $ per month for the first month of this Lease and for each subsequent month during the term of this Lease, except as provided in Paragraph 8 below. Payment shall be due on the day of each month. A security deposit in the amount of $ will be paid to Landlord on execution this Lease which amount will be used either to offset any damage to the Premises upon Tenant's vacating the Premises (usual wear and tear not to be considered damage) or to be applied in full to the purchase price of the Premises should Tenant exercise its Option to Purchase as set forth in Section Eight below.

4. Tenant’s Covenants

A. The Premises shall be used by Tenant as a residence and for no other purpose whatsoever.

B. All the usual electric, gas, and water fees shall be paid by Tenant.

C. Tenant shall maintain the Premises in good condition during the continuance of this agreement and shall neither cause nor allow any abuse of the facilities, and upon the termination or expiration of this agreement Tenant shall redeliver the property in as good condition as at the commencement of the term (reasonable wear and tear from use and obsolescence excepted), if the option to purchase is not exercised.

D. Tenant is and shall be responsible and liable for making repairs and or replacements that may be required to prevent injury or damage to the Premises, except that Landlord shall be responsible for capital improvements to the Premises.

E. Tenant shall not make or cause to be made any changes, alterations or additions, or attach any objects of permanence to portions of the building or do anything that might cause injury or damage to the Premises, without the consent of Landlord.

F. All personal property placed in or upon the Premises, or in any storage rooms, shall be at risk of Tenant, or of the party owning such personal property, and Landlord shall in no event be liable for the loss or damage of any such property.

G. Tenant must give Landlord days advance written notice of his/her intention to vacate the Premises prior to the first day of the month in which the Lease will be terminated. Tenant understands that a termination may only be effective on the first day of a month. Tenant may not terminate on any day other than the first day of the month. Thus, partial monthly rental payments are not allowed and rent shall not be prorated. Landlord may waive the restrictions in this Paragraph.

5. Rights and Privileges of Landlord

Landlord shall have the following rights in addition to all other rights given by the laws of the State of :

A. The right to enter the Premises at all reasonable times for the purpose of inspecting the same or showing the same to prospective tenants or purchasers upon a minimum of -hours notice to Tenant.

B. Landlord shall not be responsible for repairs to the Premises, which shall be the responsibility of Tenant, but shall be responsible for capital repairs and improvements.

C. Landlord, his/her agents and employees shall not be liable to any person for any damages of any nature which may occur at any time on account of any defect in the Premises, the building in which the Premises are situated, or improvements in the Premises or building, if such defect was unknown at the time of such injury or damage.

D. The failure of Landlord to insist upon the strict performance of the terms, covenants, and agreements in this Lease shall not be construed as a waiver or relinquishment of Landlord's right subsequently to enforce any such term, covenant, or condition, but the same shall continue in full force and effect.

E. Real estate taxes and insurance on the Premises shall be paid by Landlord.

6. Insurance and Destruction of Premises

Landlord shall purchase and maintain hazard and fire insurance, the proceeds of which shall be payable to Landlord. If the Premises shall be destroyed or rendered totally uninhabitable by fire, windstorm, or other cause beyond the control of Landlord, then this agreement shall cease and terminate as of the date of such destruction, and the rental shall then be accounted for and prorated between Landlord and Tenant up to the time of such damage or destruction of the Premises. If the Premises are damaged by fire, windstorm or other cause beyond the control of Landlord so as to render the same partially uninhabitable, but repairable within a reasonable time, then this Lease shall remain in force and effect and Landlord shall, within a reasonable time, restore the Premises to substantially the condition the Premises were in prior to the damage, and there shall be an abatement in rent in proportion to the relationship the damaged portion of the Premises bears to the whole of the Premises.

7. Tenant’s Default and Landlord’s Remedies

A. Landlord may give days' written notice to Tenant to correct any of the following defaults:

1. Failure to pay rent or added rent on time.

2. Improper conduct by Tenant or other occupant of the Premises.

3. Failure to fully perform any other term in this Lease.

B. If Tenant fails to correct the defaults in Paragraph A within days, Landlord may cancel the Lease by giving Tenant a written -day notice stating the date the term will end. On that date the term and Tenant's rights in this Lease shall automatically end and Tenant must leave the Premises and return the keys to Landlord. Tenant shall continue to be responsible for rent, expenses, damages, and losses.

8. Option to Purchase

Tenant shall have an option to purchase the Premises for a purchase price of $, payable in cash at closing. This option to purchase shall be exercised by Tenant by giving days notice in writing to Landlord. Landlord may waive the writing requirement. Closing of the conveyance between Landlord and Tenant shall take place within days of such notice to purchase. All expenses of the sale, including survey, applicable recording fees, and any other costs generally incurred by a purchaser, shall be paid by Tenant. Taxes shall be prorated.

Tenant has deposited earnest money toward the purchase of the Premises with Landlord in the amount of $ each month, which amount represents a portion of the monthly rent paid to Landlord and which will be applied toward the purchase price at closing. Tenant shall exercise due diligence to obtain financing to purchase the home. If Tenant in good faith is unable to obtain financing then the earnest money shall be returned. If this Lease is terminated by Landlord for reasons other than failure of Tenant to exercise due diligence to obtain financing, then the earnest money shall be returned to Tenant.

Tenant agrees to purchase the Premises by . Should Tenant be unable to close by this date, due to no fault of Tenant, Landlord agrees to extend the option to purchase for an additional months. During this extended period, an additional $ per month (until closing takes place) shall be added to the purchase price of the Premises. The amount shall be prorated if closing occurs at any time during a month.

9. No Waiver

The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

10. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

11. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

12. Mandatory Arbitration

Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

13. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

14. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

15. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

16. Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

WITNESS our signatures as of the day and date first above stated.


Landlord


Tenant

Attach Exhibit A (Legal Description)

Acknowledgments

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What a Lease Option Purchase is and how it works

A Lease Option Purchase combines a lease and a unilateral option to buy the leased property at a later date. The tenant (optionee) pays an option fee and rent during a defined option period; the landlord (optionor) grants the exclusive right to purchase for a fixed or formula-based price. This hybrid agreement defines the option fee, rent credits (if any), the option exercise procedure, closing mechanics, and remedies for default. Parties often document a memorandum for recording when they intend to protect the option against third parties or to affect title.

Why parties use a Lease Option Purchase

A Lease Option Purchase lets buyers secure purchase rights while improving seller cash flow and reducing time-to-market for property sales. It can bridge buyers who need time to qualify for financing and sellers who prefer steady rental income plus a nonrefundable option fee that compensates the seller if the buyer declines to purchase.

Why parties use a Lease Option Purchase

Typical users and roles for this agreement

These roles capture the most common U.S. use cases; legal counsel often reviews terms, especially when recording or complex financing is involved.

  • Real estate investors and fix-and-flip buyers using options to control property with limited capital.
  • Property managers and landlords offering tenant-buyers a structured path to sale while maintaining rental income.
  • Homebuyers or tenant-buyers seeking time to secure financing while locking in purchase terms.

Core clauses to include in a professional Lease Option Purchase

A complete Lease Option Purchase clearly identifies parties and property, sets option fee and term, defines purchase price mechanics, describes rent credits, and details default and closing procedures. Include exhibits for legal description and financing contingencies.

Option Fee

State the exact nonrefundable fee, payment timing, and whether it is credited toward the purchase price at closing.

Option Term

Specify start and end dates of the option period and conditions that extend, pause, or terminate the option.

Purchase Price

Fix the price or provide a formula (appraisal, market index) and state how adjustments or credits apply at closing.

Rent Credits

Describe any portion of rent that counts toward purchase price: amount, accrual method, and forfeiture conditions.

Default & Remedies

List events of default, cure periods, consequences for failure to exercise, and whether the optionor retains the fee.

Closing Mechanics

Set notice requirements to exercise, closing timeline, escrow instructions, title obligations, and required deliverables at closing.

Essential data fields to capture on the form

Property: Legal description
Parties: Full legal names
Option Fee: Amount and payment terms
Purchase Price: Fixed or formula
Option Period: Start and end dates
Signatures: Signers and dates

Step-by-step: completing a Lease Option Purchase

Follow a clear sequence: draft terms, verify property/title, execute the agreement with proper signatories, and follow exercise and closing steps precisely.

  • 01
    Draft: Assemble parties, legal description, price, fee, and term.
  • 02
    Title Check: Order title search and address liens before execution.
  • 03
    Execute: All parties sign; notarize or witness if required.
  • 04
    Exercise: Buyer gives written notice to exercise within option term.

Configuring an online Lease Option Purchase workflow

Set up template elements, signer order, and authentication so the agreement is routed and completed consistently.

Field Configuration
Document Template Use a locked template with editable fields for price, dates, and party names
Signature Fields Place distinct signature and date fields for each party
Authentication Enable email or SMS codes; require stronger auth for high-value deals
Conditional Fields Show rent-credit clauses only when rent credits are selected

Delivery and digital signing considerations

Use audit trails, secure storage, and optional notarization or RON where state rules or recording plans require formal acknowledgment.

  • Formats: PDF and DOCX supported
  • Integrations: CRM and storage integrations available
  • Authentication: Email, SMS, or stronger methods

Where to send or file the signed Lease Option Purchase

After execution, distribute signed originals and consider recording a memorandum if the parties intend to protect the option against third-party claims.

  • Lender / Title: Provide executed copies to lenders and title companies for closing and lien review.
  • County Recorder: Record memorandum only if you intend to provide public notice of the option.
  • Escrow Agent: Deposit option fee and instructions with escrow for closing.
  • Each Party: Deliver final signed copies to both optionor and optionee for their records.

Key dates and deadlines to track

Identify and calendar the option expiry, exercise notice deadline, closing window, and any cure periods to avoid missed rights.

Option Expiration:

Date by which the buyer must exercise the option

Exercise Notice:

Notice required before exercising; follow contract timing

Closing Deadline:

Number of days after exercise for closing

Rent Credit Schedule:

Dates when credits accrue and how they apply

Cure Periods:

Time allowed to cure defaults before termination

Sequential milestones from agreement to closing

A typical Lease Option Purchase moves through negotiation, execution, option exercise, and closing — track milestones to manage risk and timing.

01

Negotiation

Agree on price, term, option fee, and credits

02

Execution

All parties sign; obtain notarization or witnesses if needed

03

Option Exercise

Buyer gives written notice within the option term

04

Closing

Escrow completes title transfer and applies credits

Common pitfalls to avoid when preparing the agreement

  • Vague purchase-price formulas that create disputes at closing when market metrics differ.
  • Missing or inaccurate legal property descriptions that cause recording or title defects.
  • Failing to specify whether option fees and rent credits are refundable or forfeitable.
  • Not addressing third-party liens, financing contingencies, or the need for a recorded memorandum.

Consequences and legal risks from improper preparation

Unenforceable Option: Court may void unclear option terms
Fee Forfeiture: Buyer can lose option fee if exercise fails
Title Defects: Unaddressed liens complicate closing
Recording Issues: Failure to record can reduce priority
Tax Consequences: Mischaracterized payments may affect tax treatment
Litigation Costs: Disputes lead to attorney and court fees

Electronic signature vs digital signature: what to expect

Understand the technical and legal differences when choosing how parties sign a Lease Option Purchase.

Criteria Electronic Signature Digital Signature
Legal Status recognized under esign recognized under esign
Technology various methods pki-based cryptography
Non-repudiation audit trail evidence strong cryptographic proof
Typical Use contracts, agreements regulated records

Real-world examples of executing property agreements online

These case summaries show how online signing and document workflows support property transactions and reduce friction across parties.

Martin Properties

Tim Martin found online execution enabled full compliance and faster turnarounds.

  • He emphasized mobile and offline capabilities.
  • He processed and executed documents online with compliance and security, enabling efficient returns to clients and faster closings without in-person meetings.

Optica Ventures

Brian Fitzgibbons highlighted ease of use for customers.

  • The interface reduced training time.
  • The simple, easy-to-use interface helped internal teams and customers complete agreements quicker while maintaining required audit trails and records.

Common eSignature vendor pricing and capability comparison

Pricing models and key capabilities vary; signNow appears first in the comparison. Use vendor pricing and plan features to match authentication, compliance, and volume needs.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about Lease Option Purchase agreements

Answers to common questions about e-signing, recording, exercising the option, and reversing or canceling the agreement.


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