What is a lease purchase agreement?

A lease purchase agreement is a rent-to-own contract in which the tenant agrees to rent a home for a fixed period and then buy it. The purchase is an obligation, not a choice. When the term ends, the tenant must complete the sale at the price and terms written into the contract, or face whatever default consequences the agreement spells out.

The main point of contrast is with a lease option. A lease option gives the tenant the right, but not the duty, to buy at the end of the term. If the tenant decides not to proceed, the option simply lapses, though the option fee and any credited rent are usually lost. A lease purchase agreement removes that exit. The buyer is committed from the start, and the seller can usually pursue the sale or the remedies in the contract if the buyer fails to close.

This matters because the two structures carry different risk. Under a lease purchase agreement, a tenant who cannot qualify for a mortgage or cannot raise the agreed price at the end of the term may be in breach. Ontario buyers should read how the purchase price is set, how rent credits are applied, and what happens on default before signing. Providers listing these deals in Ontario are often grouped with other rent-to-own options in our lease-option homes directory, so check the contract type with each one you contact.

In short, a lease purchase agreement turns a future home purchase into a firm commitment, while a lease option keeps that decision open.

"