What does a “lease option” allow a tenant to do?

A lease option is a unique arrangement in real estate where a tenant leases a property with the added benefit of having the option to purchase the property at a later date, typically under specific terms outlined in the lease agreement. This arrangement provides flexibility for the tenant, allowing them the opportunity to test the property and its suitability for their needs while preparing for a potential purchase.

The key aspect of a lease option is that it does not obligate the tenant to purchase the property; instead, it grants them the right to buy it within a specified time frame at a predetermined price. This can be particularly advantageous in a rising real estate market, where property values might increase, as the tenant can secure the purchase price ahead of time.

In contrast, leasing without conditions does not provide the future purchasing option, leasing for an indefinite period suggests a lack of a fixed term, and requiring a mandatory purchase removes the flexibility offered by a lease option. Thus, the option to purchase distinguishes this type of lease from other leasing agreements in real estate.