Lease to Own Agreement template

Free Lease to own agreement template

A lease to own agreement is a type of contract where a person rents an asset with the option to purchase it after a specified timeframe. We say “asset” because the rent-to-own option is commonly used for larger purchases such as real estate, a car, or expensive equipment, but can be utilized for situations where the buyer may not have the credit or funds for a down payment. 

The standard lease-to-own agreement typically includes the buyer and seller’s details, the terms regarding rent payments, the purchase price, and the conditions under which the purchase option can be exercised.

To create a lease to own agreement, use Docusign’s free fillable template that can be edited and customized to match the specifics of the item being rented. Once the agreement is tailored to your needs, you can download, print, or send it digitally for signatures through Docusign. To get started, just click on the agreement template below:

A lease-to-own agreement creates a mutually beneficial arrangement, offering a path to ownership. Our editable rent-to-own agreement provides everything you need in such a contract thus making the process both easier and more secure for all parties involved. And sending it via Docusign ensures the agreement is securely stored. Sign into your account or register for your free account here.

What is a lease-to-own agreement?

A lease-to-own agreement—also referred to as a rent-to-own or lease-option contract—is a hybrid arrangement that starts as a rental and transitions into an opportunity to buy. In this setup, a tenant can rent the property with an option (but not an obligation) to buy it at a predetermined price when the lease ends. 

These agreements blend the terms of a lease with those of a future purchase. Generally, the tenant pays a non-refundable option fee upfront, plus higher-than-average rent, a portion of which may be credited toward the home's purchase price if the option is exercised. Such arrangements target renters who need time to save or improve their credit before securing a mortgage.

When do you need a lease-to-own agreement?

Lease-to-own agreements are ideal when:

• You’re not ready for traditional financing but want time to save for a down payment or boost your credit score.

• You’d like to lock in a purchase price upfront, especially attractive if property values are rising.

• You want to “test-drive” a property before fully committing to a purchase.

These agreements offer flexibility not found in standard rent or purchase contracts—but they come with risks. If the tenant can't secure a mortgage or opts out, any fees and rent credits may be forfeited. It’s crucial to understand the contract’s terms, as they often place maintenance responsibilities on the tenant and may offer fewer legal protections than a standard mortgage agreement.

What is included in a lease-to-own agreement?

To create an enforceable and legally binding Lease to Own Agreement, the template should include the following essential elements:

• Identification of parties: Full legal names and contact information of the landlord/seller and tenant/buyer.

• Description of property: Clear address and details of the property subject to the agreement.

• Term: Start and end dates of the lease period.

• Rent amount and payment terms: Monthly rent amount, due date, and payment instructions.

• Option to purchase: Terms granting the tenant the right to purchase, including purchase price, option fee, and how rent credits apply.

• Exercise of option: Process and timeline for the tenant to notify the landlord of their intent to purchase.

• Condition of property: “As is” status or other agreed conditions, and any inspection rights.

• Maintenance and repairs: Allocation of responsibilities between landlord and tenant.

• Default provisions: Consequences if either party breaches the agreement.

• Assignment restrictions: Whether the tenant can transfer their rights.

• Closing process: How closing will occur and allocation of closing costs.

• Governing law: The state or jurisdiction’s law that applies.

• Signatures: Dated signatures of all parties.

Additional (optional) clauses

Depending on the needs of the parties, additional clauses may be added, such as:

• Early termination rights: Conditions under which either party may terminate early.

• Pets policy: Whether pets are allowed and any related deposits.

• Improvements and alterations: Rules about making changes to the property.

• Insurance requirements: Who must carry property or renter’s insurance.

• Dispute resolution: Mediation or arbitration requirements.

• Utilities and services: Which party pays for utilities and services.

• Additional rent credit terms: Further details on how credits accrue or are forfeited.