What is a "lease option"?

A lease option is a legal agreement that combines a lease and an option to purchase. Specifically, it grants a tenant the right to buy the property at a predetermined price after a certain period, usually at the end of the lease term. This arrangement benefits the tenant by providing the opportunity to own the property in the future while allowing them to occupy and use it immediately. It creates a pathway for tenants who may not currently qualify for a mortgage or are uncertain about their ability to buy a home. The option to purchase is often outlined explicitly in the lease agreement, including the duration of the option and the predetermined purchase price.

The other choices present alternative scenarios. The first option describes a typical rental agreement without any purchasing rights. The third option relates to improvements made by a tenant and does not include any purchasing agreement. The fourth option refers to a temporary rental situation unrelated to a lease option, which focuses specifically on rental arrangements during renovations. These descriptions do not encapsulate the essence of a lease option.