Purchase Lease Option Agreement

Purchase Lease Option Agreement Template for Malaysia

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Key Requirements PROMPT example:

"I need a Purchase Lease Option Agreement for a commercial property in Kuala Lumpur, with a 2-year lease term starting March 2025 and an option to purchase at a fixed price of RM 2.5 million, including provisions for rental payments to be partially credited towards the purchase price."

Document background

The Purchase Lease Option Agreement serves as a vital instrument in Malaysian property transactions, offering a hybrid solution that bridges leasing and purchasing arrangements. This document type is particularly useful when parties wish to establish a lease relationship with a built-in option for the tenant to purchase the property at a predetermined price within a specified timeframe. It's commonly used in situations where potential buyers need time to arrange financing, want to test the property's suitability for their needs, or prefer a gradual approach to property ownership. The agreement must comply with Malaysian legal requirements, including the National Land Code 1965, Contracts Act 1950, and relevant state-level regulations. It typically includes detailed provisions for both the lease period and the purchase option, including rent payments, maintenance responsibilities, option exercise procedures, and purchase price calculations.

Suggested Sections

1. Parties: Identifies and defines the Landlord/Seller and Tenant/Buyer, including full legal names, registration numbers for companies, and addresses

2. Background: Sets out the context of the agreement, including property ownership status and parties' intentions regarding the lease and potential purchase

3. Definitions: Defines key terms used throughout the agreement, including Property, Option Period, Purchase Price, Lease Term, and other relevant terminology

4. Grant of Lease: Details of the lease arrangement, including term, rent, payment terms, and standard tenant obligations

5. Option to Purchase: Specifies the terms of the purchase option, including option fee, exercise period, and mechanism for exercising the option

6. Purchase Price and Payment Terms: States the agreed purchase price, payment structure, and any adjustments or credits from lease payments

7. Exercise of Option: Procedures and requirements for exercising the option, including notice requirements and timeframes

8. Completion of Purchase: Requirements and procedures for completing the purchase if the option is exercised

9. Maintenance and Repairs: Responsibilities for property maintenance and repairs during the lease period

10. Insurance: Insurance requirements for both parties during the lease period

11. Default and Termination: Circumstances constituting default, consequences, and termination procedures

12. Governing Law and Jurisdiction: Specifies Malaysian law as governing law and relevant jurisdiction for disputes

Optional Sections

1. Option Extension: Used when parties want to include provisions for extending the option period under specified conditions

2. Rent-to-Purchase Credits: Include when a portion of rental payments will be credited toward the purchase price

3. Property Management: Needed for properties within managed complexes or when specific management arrangements are required

4. Assignment and Subletting: Include if transfer of rights or subletting possibilities need to be addressed

5. Renovations and Improvements: Required when tenant is allowed to make property modifications during the lease period

6. Special Conditions: For any unique requirements or conditions specific to the transaction

7. Strata Title Provisions: Required for properties under strata management

8. GST/Tax Provisions: Include when specific tax arrangements need to be addressed

Suggested Schedules

1. Property Description: Detailed description of the property including lot number, title details, and physical description

2. Lease Terms: Comprehensive lease conditions including rent amount, payment schedule, and special conditions

3. Option Terms: Detailed terms of the option including price calculation formula and exercise conditions

4. Property Condition Report: Detailed report of property condition at lease commencement

5. Permitted Use: Specific details about how the property may be used during the lease period

6. Maintenance Schedule: Detailed breakdown of maintenance responsibilities between parties

7. Payment Schedule: Detailed breakdown of all payments including rent, option fee, and purchase price components

Authors

Alex Denne

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

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Real Estate

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Retail

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Real Estate Manager

Property Manager

Legal Counsel

Contract Administrator

Business Development Manager

Chief Financial Officer

Asset Manager

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Real Estate Agent

Property Developer

Compliance Officer

Risk Manager

Operations Director

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