Lease Agreement With Option To Purchase (Real Estate) Template for Canada

A comprehensive legal document governed by Canadian law that combines a traditional lease agreement with an option to purchase the property. This dual-purpose agreement establishes the terms and conditions for both the rental period and the potential future purchase of the property. It details rent payments, maintenance responsibilities, option period, purchase price, and any rent credits that may apply toward the purchase. The document must comply with provincial residential tenancy laws and real estate regulations while protecting both parties' interests in what could eventually become a full property sale transaction.

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What is a Lease Agreement With Option To Purchase (Real Estate)?

The Lease Agreement With Option To Purchase (Real Estate) is a specialized contract used in Canadian real estate transactions where a property owner wishes to lease their property while giving the tenant the exclusive right to purchase it within a specified timeframe. This document is particularly useful in situations where potential buyers need time to arrange financing, build equity through rent payments, or test the property's suitability before committing to a purchase. The agreement includes detailed provisions for both the lease period (including rent, maintenance, and usage terms) and the purchase option (including price, deadline, and exercise conditions). It must comply with provincial property laws, residential tenancy acts, and real estate regulations. This type of agreement is commonly used in both residential and commercial contexts, offering flexibility for both parties while establishing clear terms for a potential future sale.

What sections should be included in a Lease Agreement With Option To Purchase (Real Estate)?

1. Parties: Identification of the landlord/seller and tenant/buyer, including full legal names and addresses

2. Background: Context of the agreement, including property details and general purpose of the arrangement

3. Definitions: Key terms used throughout the agreement defined for clarity

4. Lease Terms: Core lease provisions including rent amount, payment terms, and duration

5. Property Use and Maintenance: Permitted use of property and maintenance responsibilities

6. Option to Purchase: Terms of the purchase option, including price and duration of option

7. Exercise of Option: Process and requirements for exercising the purchase option

8. Purchase Price and Payment: Agreed purchase price and how rent payments may apply to purchase

9. Property Condition: Current condition of property and any required improvements

10. Insurance Requirements: Required insurance coverage during lease and transfer upon purchase

11. Default and Remedies: Consequences of default under either lease or purchase provisions

12. Assignment and Subletting: Rights and restrictions regarding transfer of lease or option rights

13. Notices: How formal communications between parties must be made

14. Governing Law: Applicable jurisdiction and laws governing the agreement

15. General Provisions: Standard contract clauses including severability and entire agreement

What sections are optional to include in a Lease Agreement With Option To Purchase (Real Estate)?

1. Rent Credit Towards Purchase: Used when a portion of rent payments will be credited toward the purchase price

2. Property Improvements: Include when tenant is permitted to make improvements that affect purchase price

3. Environmental Matters: Required for properties with known environmental issues or industrial use

4. Co-signer Provisions: Include when a guarantor is required for the lease or purchase option

5. Early Purchase Option: Terms for exercising the purchase option before lease end

6. Financing Contingencies: Include when purchase option exercise depends on buyer obtaining financing

7. Property Management: Used for properties requiring specific management arrangements during lease

8. Option Extension Terms: Include when option period may be extended under certain conditions

What schedules should be included in a Lease Agreement With Option To Purchase (Real Estate)?

1. Schedule A - Property Description: Detailed legal description of the property and included fixtures

2. Schedule B - Rent Payment Schedule: Detailed breakdown of rent payments and due dates

3. Schedule C - Purchase Price Calculation: Formula for determining final purchase price including rent credits

4. Schedule D - Property Condition Report: Detailed assessment of property condition at lease start

5. Schedule E - Permitted Improvements: List of improvements tenant is authorized to make

6. Appendix 1 - Property Plans: Floor plans and property boundaries

7. Appendix 2 - Insurance Requirements: Detailed insurance specifications

8. Appendix 3 - Environmental Reports: Any environmental assessments or reports

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Cost

Free to use

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