What is a lease option?

A lease option is specifically defined as a rental agreement that not only allows tenants to inhabit the property but also includes an option for the tenant to purchase the property later. This arrangement typically outlines the terms under which the tenant can buy the property, including the purchase price, and may be appealing for tenants who want to try living in a property before committing to purchasing it.

In a lease option, the tenant usually pays a premium on the rent, which can sometimes go towards the eventual purchase price. This type of agreement provides a potential pathway to homeownership while allowing the tenant to enjoy the benefits of occupying the property as a renter.

Other types of lease agreements, such as those that solely focus on renting the property without any future purchasing option, do not qualify as lease options since they do not provide the tenant with the opportunity to buy the property.