What is a lease-option agreement?

A lease-option agreement is a specific type of rental contract where the tenant has the right, but not the obligation, to purchase the property at a predetermined price after a specified lease period. This agreement combines aspects of both leasing and purchasing, providing the tenant with the flexibility to decide whether they want to buy the property at the end of the lease term.

In this type of agreement, tenants typically pay an option fee upfront, which may be credited toward the purchase price if they decide to buy the property. This structure is beneficial for tenants who are interested in potentially owning the home but may not be ready to purchase outright at the beginning of the leasing period. It provides a path to ownership and can be especially appealing in a market where home prices are expected to rise.

The other choices focus on aspects that do not capture the essence of a lease-option agreement. For example, some choices reference maintenance responsibilities or only outline lease terms without the option to purchase, which are not inherent features of a lease-option agreement. Additionally, mentions of legal documents for commercial property leases do not encompass the unique characteristics of the lease-option structure.