What is a "lease option"?

A lease option is specifically defined as an agreement that allows a tenant the right to purchase the property they are renting within a specified period. This arrangement combines elements of both leasing and purchasing, providing the tenant with the opportunity to secure a future purchase while they occupy the property as a renter. The tenant typically pays an option fee for this privilege, which may be applied to the purchase price if they decide to exercise the option to buy.

In the context of real estate, this arrangement is beneficial for both parties: the landlord can attract tenants who may eventually buy the property, while the tenant can assess living in the property before making a significant financial commitment. This distinctive feature sets lease options apart from other types of rental agreements or lease arrangements that do not include the option to purchase.