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Lease Purchase Option (Real Estate)

Lease Purchase Option (Real Estate) Template for India

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Key Requirements PROMPT example:

Lease Purchase Option (Real Estate)

"I need a Lease Purchase Option (Real Estate) agreement for a commercial warehouse property in Mumbai, with a 24-month lease term starting March 2025, and an option to purchase at a pre-agreed price of ₹2.5 crore, with 50% of the paid rent to be adjusted against the purchase price."

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Document background
The Lease Purchase Option (Real Estate) agreement is a sophisticated legal instrument used in Indian property transactions where parties wish to combine a lease arrangement with a future purchase opportunity. This document is particularly useful when a potential buyer needs immediate property access but requires time before making a full purchase commitment, whether due to financial planning, market assessment, or other strategic considerations. It includes comprehensive provisions governed by Indian property law, covering lease terms, purchase option details, property maintenance, and transfer conditions. The agreement is commonly used in both residential and commercial contexts, providing flexibility while protecting both parties' interests through clear terms and conditions. The document must comply with various Indian legislations including the Transfer of Property Act, Registration Act, and state-specific property laws.
Suggested Sections

1. Parties: Identification of the lessor/seller and lessee/potential buyer, including full legal names, addresses, and other contact details

2. Background: Context of the agreement, including property details and the parties' intention to enter into a lease with purchase option arrangement

3. Definitions: Key terms used throughout the agreement, including Property, Lease Term, Purchase Option, Option Period, etc.

4. Lease Terms: Duration of lease, rental amount, payment schedule, security deposit, and other standard lease provisions

5. Property Usage and Maintenance: Permitted use of property, maintenance responsibilities, and condition requirements

6. Purchase Option Terms: Details of the option to purchase, including option price, option period, and exercise process

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

8. Purchase Price and Payment: Purchase price calculation, credit of rent payments (if applicable), and payment terms

9. Title and Property Transfer: Provisions regarding title clearance, transfer process, and documentation requirements

10. Representations and Warranties: Statements and guarantees made by both parties regarding the property and their capacity to enter the agreement

11. Default and Remedies: Consequences of default under either lease or purchase option terms, and available remedies

12. Notices: Process and requirements for formal communications between parties

13. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for dispute resolution

14. Execution: Signature blocks and execution requirements

Optional Sections

1. Property Insurance: Detailed insurance requirements if not covered in main lease terms

2. Environmental Matters: Include for properties with potential environmental concerns or compliance requirements

3. Financing Contingencies: Include when purchase option exercise is subject to buyer obtaining financing

4. Property Improvements: Include when lessee is permitted to make improvements that may affect purchase price

5. Assignment and Subletting: Include when transfer of lease or option rights needs to be specifically addressed

6. Broker Relationships: Include when real estate brokers are involved in the transaction

7. Force Majeure: Include specific provisions for unforeseen circumstances affecting the agreement

8. Mediation/Arbitration: Include if parties prefer alternative dispute resolution methods

Suggested Schedules

1. Schedule A - Property Description: Detailed legal description of the property, including boundaries and registration details

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

3. Schedule C - Purchase Price Calculation: Formula or method for determining final purchase price, including any rent credit calculations

4. Schedule D - Property Inventory: List of fixtures, fittings, and items included/excluded in lease and sale

5. Schedule E - Condition Report: Detailed assessment of property condition at lease commencement

6. Appendix 1 - Required Documents: List of documents required for option exercise and property transfer

7. Appendix 2 - Property Plans: Floor plans, site maps, and other relevant property drawings

8. Appendix 3 - Maintenance Schedule: Detailed maintenance responsibilities and schedules for both parties

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 | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Property
Lease Term
Commencement Date
Expiration Date
Base Rent
Security Deposit
Option Period
Option Price
Purchase Price
Option Exercise Notice
Rent Credit
Permitted Use
Common Areas
Improvements
Fixtures and Fittings
Force Majeure Event
Business Day
Completion Date
Due Diligence Period
Environmental Laws
Governmental Authority
Lessor
Lessee
Material Adverse Effect
Occupancy Date
Operating Expenses
Property Documents
Purchase Option
Registration Requirements
Stamp Duty
Title Documents
Transfer Date
Utilities
Valuation Date
Maintenance Charges
Encumbrances
Applicable Laws
Default Event
Notice Period
Property Tax
Related Parties
Substantial Damage
Transfer Fees
Clauses
Property Description
Lease Terms
Rent Payment
Security Deposit
Purchase Option
Option Exercise
Property Usage
Maintenance and Repairs
Insurance
Property Transfer
Title and Ownership
Representations and Warranties
Default and Remedies
Force Majeure
Assignment and Subletting
Indemnification
Dispute Resolution
Governing Law
Notices
Amendments
Severability
Registration and Stamp Duty
Environmental Compliance
Utilities and Services
Property Access
Improvements and Alterations
Property Inspection
Due Diligence
Termination
Survival
Entire Agreement
Counterparts
Time of Essence
Costs and Expenses
Relevant Industries

Real Estate

Commercial Property

Residential Property

Retail

Industrial

Hospitality

Healthcare

Education

Manufacturing

Warehousing and Logistics

Relevant Teams

Legal

Real Estate

Facilities Management

Finance

Operations

Procurement

Risk and Compliance

Business Development

Property Management

Asset Management

Relevant Roles

Real Estate Manager

Property Manager

Legal Counsel

Corporate Lawyer

Business Development Manager

Facilities Manager

Chief Financial Officer

Operations Director

Real Estate Developer

Asset Manager

Procurement Manager

Contract Administrator

Risk Manager

Compliance Officer

Property Acquisition Manager

Industries
Transfer of Property Act, 1882: Governs the transfer of property between parties, including provisions for lease agreements and sale of immovable property. Sections 105-116 specifically deal with leases, while Sections 54-57 cover sales.
Registration Act, 1908: Mandates registration of lease deeds exceeding 11 months and property sale agreements. Sections 17 and 49 are particularly relevant for registration requirements.
Indian Contract Act, 1872: Provides the fundamental principles of contract formation, including offer, acceptance, consideration, and contractual capacity, which are essential for both lease and purchase agreements.
Indian Stamp Act, 1899: Determines the stamp duty payable on lease agreements and property transfer documents. Different states have their own stamp duty rates.
Real Estate (Regulation and Development) Act, 2016 (RERA): Regulates real estate transactions, especially for new properties, and provides consumer protection measures in property dealings.
State-specific Rent Control Acts: Various states have their own rent control laws that regulate tenant-landlord relationships, rent increases, and eviction procedures.
Income Tax Act, 1961: Relevant sections dealing with taxation of rental income and capital gains from property transactions, including TDS requirements.
Specific Relief Act, 1963: Provides remedies in case of breach of contract, particularly relevant for specific performance of property purchase agreements.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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