There are three different financing documents such as Lease options, lease purchase and options to purchase. They are state specific and all states have different laws associated with them. As a buyer, you should seek advice from a real estate lawyer before entering into an agreement with the seller.

The following are a few guidelines to lease purchase:

• Buyers should initially pay the sellers option money. This may be just a bare minimum amount and is paid to obtain the right of purchasing the property later.

• Both the buyer and seller need to agree on a price for purchase. This may be equal to or a little higher than the current market value.

• During the period of the option, the buyer allows the lease the house from the seller for a rental amount that is predetermined.

• The period for the lease purchase agreement could be decided upon but most often it is kept to be from one to three years. During this time, the buyer applies for a bank loan so that he/she can pay the seller the full amount.

• Te option money paid in the beginning is not generally considered to be a part of the down payment.

• Option money will not be refunded

• The seller cannot offer the property to someone else. This can be done only if the buyer fails to make his/her payments.

• The buyer is not entitled to assign the lease purchase agreement unless the seller approves of it.

• The buyers are responsible for paying all expenses incurred in the maintenance of the property including insurance and taxes.

• A small part of the lease payment received every month is applied towards the purchasing price.

• The buyer is required to purchase the property.