The state of Georgia regulates the legal framework for business relationships between lenders and debtors and landlords and tenants. One way of outlining these rights and responsibilities can be found in a lease. However, there are many types of leases and options that may be attached to a contract. A popular lease type during difficult financial times is the lease with the option to buy. However, not all clauses and options on a lease are lawful in Georgia.

Lease With an Option to Buy

The lease with an option to buy, or lease-purchase agreement, involves an agreement between a landlord and tenant for the use of a property as a tenant for an initial period with the option of purchasing the home at a later date. In some agreements, the monthly rental payments, or a fraction of them, go toward the payment of the property if the tenant decides to exercise his option to purchase the property.

Credit Sales

The Georgia Lease-Purchase Agreement Act states a lease purchase agreement will not be valid if it is a credit sale as defined by the Truth in Lending Act. The law is a federal act that ensures lenders disclose information in a clear and standardized format. According to this act, a credit sale of a home is a sale where the seller of a property is also a creditor to the buyer.


A lease with option to buy, also known as a lease purchase agreement, must be formalized by a written statement and meet the following requirements, according to Section 10-1-682 of the Georgia Lease Purchase Agreement Act. It must include a brief description of the property leased, the initial payment amount, delivery charge and other additional fees, as well as the frequency and amount of the installments the lessee agrees to pay.

Unlawful Provisions

The Georgia Lease Purchase Agreement Act sets limits to the clauses or provisions a lessor can include in a lease with option contract. For instance, such an agreement must not require the garnishment of wages of a lessee, authorize the lessor to unlawfully enter the lessee's property or request the lessee waive his rights of defense or counterclaim. A lessor cannot require a lessee to purchase insurance on the item or impose an early termination fee on lessor who wishes to return the leased item before the termination of the lease with an option to buy agreement.