Thinking about selling your home but not getting the offers you’d hoped for? Maybe you’ve got a decent place in Ontario, but buyers keep asking for repairs or can’t line up their financing. Or maybe you’ve got a tenant who loves the house but just isn’t quite mortgage-ready. That’s where lease-to-purchase agreements can come in handy.
A lease-to-purchase deal—sometimes called rent-to-own—can be a smart option if you’re open to getting a steady income now and a full sale later. But how does it actually work? And more importantly, is it a good move for you?
Let’s unpack it.
What Is a Lease-to-Purchase Agreement?
A lease-to-purchase agreement lets a renter live in your house for a set period—usually 1 to 3 years—with the option to buy the home at the end of the lease. It’s kind of a hybrid between renting and selling.
Here’s the gist:
- The tenant pays monthly rent like any other renter.
- A portion of that rent might go toward the eventual purchase price.
- The tenant has the option, not the obligation, to buy at the end of the lease.
Simple enough, right? But there’s more under the hood you’ll want to understand before jumping in.
Key Parts of a Lease-to-Purchase Agreement
If you’re considering selling your house this way, here’s what you’ll usually see in the agreement:
1. Option Fee
This is a non-refundable upfront fee the tenant pays to “lock in” the option to buy later. It’s usually between 1%–5% of the home’s price. Think of it as a down payment on their right to buy.
If they decide not to buy, you keep the fee.
2. Purchase Price
You’ll either set the price upfront, or agree it’ll be based on market value at the time of purchase. Setting the price now can protect you if prices dip later, but could cost you if the market goes up.
3. Lease Term
This is how long the tenant has to decide if they’re going to buy. Most lease terms run from 12 to 36 months.
4. Rent Credits
Sometimes, sellers agree to apply part of the monthly rent toward the eventual purchase price. It’s a little nudge to help the tenant save up while giving them skin in the game.
Let’s say rent is $2,000/month, and $300 of that goes toward the future purchase. That $300/month might build into a decent down payment by the end of the lease.
5. Maintenance and Repairs
Here’s where things can get tricky. Some agreements require the tenant to handle minor repairs, while the seller covers major issues. Others flip it. You’ve gotta be clear on this from the start—or things could get messy.
Why Would a Homeowner in Ontario Use Lease-to-Purchase?
Fair question. It’s not for everyone, but it can be a win-win in the right situation.
Here’s why some sellers choose this path:
- Your house needs work. Maybe you’re not up for repairs and upgrades, but your buyer is.
- It’s been sitting. If your listing’s gone cold, a lease-to-own could attract new interest.
- You’ve got a tenant already. Maybe they want to stay, but can’t buy just yet.
- You’re in no rush. If you can wait a couple years to cash out and enjoy steady income in the meantime, this setup might be golden.
At Bloom Homes, we’ve worked with plenty of Ontario sellers stuck between a rock and a hard place. Sometimes a straight cash sale isn’t the best answer, and a lease-to-purchase gives everyone breathing room.
When Lease-to-Purchase Works Best
This setup isn’t for every seller, but it shines in certain situations:
- Slow market: Not many buyers, but renters are still circling.
- Your house isn’t bank-financing friendly: Maybe it needs repairs, or it’s unique.
- Tenant-occupied homes: You want to sell but don’t want to evict.
- You’re flexible: If you’re okay waiting a bit for the final payout, this can work.
Benefits for Sellers
Let’s be real—selling a house can be a hassle. Lease-to-own cuts out some of the drama.
Here’s why it can be a solid move:
- You collect rent right away.
- You get a buyer who’s invested in the house.
- You avoid repair demands and picky buyer inspections.
- You can lock in a price in today’s market.
- You might earn more overall than a quick sale would bring.
Plus, if the buyer walks away at the end? You keep the option fee and all the rent payments. You’re not losing here.
What Could Go Wrong?
It’s not all sunshine. Lease-to-purchase has its quirks and risks, too.
Watch out for:
- Unqualified tenants who fall behind on rent.
- Disagreements about who handles what repairs.
- Delays in the sale if the buyer still isn’t ready to buy when the lease ends.
- Legal headaches if the contract isn’t tight.
You need a clear agreement. No handshake deals. Everything should be on paper and reviewed by someone who knows Ontario real estate law.
Who Handles the Legal Stuff?
This isn’t something to DIY with a template you found online. If you go this route, talk to a local lawyer who knows real estate. They’ll help you write a rock-solid contract and make sure you’re covered.
At Bloom Homes, we help Ontario homeowners who want to explore creative selling options like this. We’ll walk through the fine print, make sure it fits your goals, and take care of the heavy lifting so you don’t get stuck later.
What Buyers Look for in These Deals
Most lease-to-purchase buyers fall into a few groups:
- People fixing credit: They plan to qualify for a mortgage but need time.
- Self-employed buyers: Banks love paperwork. These folks don’t always have it.
- Newcomers to Canada: They might not have local credit history yet.
- Folks who just don’t want to move twice: They’re ready to settle in now.
These buyers are motivated. They want to make your house theirs—and they’ll usually take good care of it.
Alternatives If Lease-to-Purchase Isn’t for You
If you’re reading this and thinking “ehhh, maybe not for me,” no worries. You’ve got options.
- Sell for cash: Skip the banks, skip the showings, and close in as little as a week.
- List with an agent: If your house is market-ready and you’re okay waiting, go for it.
- Offer seller financing: You act like the bank. Great for buyers who don’t qualify yet.
- Sell as-is to a local buyer: Don’t fix a thing. Let someone else handle it.
Each has pros and cons. If you’re not sure what fits, reach out to Bloom Homes and we’ll help you weigh your options—no pressure.
Real Talk: Is Lease-to-Purchase the Right Move?
Only you can answer that. But here are a few things to think about:
- Do you need the full sale money right away?
- Are you comfortable being a landlord for a while?
- Is your house tough to sell in its current condition?
- Would a monthly income while waiting to sell be helpful?
If you answered yes to any of those, lease-to-own might deserve a second look.
How Bloom Homes Can Help
We’re not just cash buyers. At Bloom Homes, we believe sellers should have choices. We’ve helped folks all over Ontario sell their homes fast—through cash deals, creative financing, lease-to-purchase, and everything in between.
Here’s what you get with us:
- Local experience
- No judgment, no pressure
- Flexible selling solutions
- Clear and fair agreements
- Quick answers and real support
Whether your home’s a beauty or a bit of a mess, we’re here to help you move forward.
Ready to explore lease-to-purchase or other options? Check us out at Bloom Homes and see what’s possible.