Massachusetts Lease to Own Agreement

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The Massachusetts Lease to Own Agreement (also called a “Lease with Option to Purchase”) is a contract that outlines an agreement in which a home is rented as normal, with the added option that the tenant can purchase the property at the end of the lease. It puts into writing the formalities, conditions, and expectations of the parties bound to the agreement, which is one of the most complex types available for use in Massachusetts. Once the contract is executed, the tenant(s) will rent the property in a similar fashion as to a residential lease. However, it’s important to understand that the tenant(s) are not required to purchase the property at the end of the lease; it is merely an option available to them.

Additional Considerations

Although the decision to purchase is an option for the tenants, they should NOT sign the agreement without the full expectation that they will, indeed, buy the home at the end of the lease. This is because of two (2) important reasons:

  1. Rental payments are higher than those in a standard lease because a portion of the rent contributes towards a down payment on the property. If the tenant were to decide not to purchase, the money spent towards the down payment would be lost (kept by the seller).
  2. Conditions are less-favorable than a standard lease; typically requires tenants to make all repairs and modifications themselves.

Before entering in this type of contract, the parties will want to assure that the contract establishes that the monthly payments made by the tenant are more than market-rate to make sure the bank credits the extra payments made toward purchasing the home.