What is a Lease Option?

A lease option, also known as a rent-to-own agreement, is a type of real estate contract that allows a tenant to lease a property with the option to purchase it at a later date. It is a two-part agreement that combines a lease agreement with an option to purchase.

Under a lease option, the tenant typically pays an upfront fee or option fee for the right to purchase the property at a later date. This fee is usually non-refundable and is applied towards the purchase price if the tenant chooses to exercise their option to buy.

During the lease period, the tenant pays rent to the landlord and has the right to live on the property. The lease period can range from several months to several years, and the purchase price of the property is typically determined at the time the lease option is signed.

At the end of the lease period, the tenant has the option to purchase the property at the predetermined price. If the tenant chooses not to exercise their option, they can simply walk away and forfeit their option fee.

Lease options can be a good option for tenants who may not have the funds or credit to purchase a property outright, but who want to lock in a purchase price and have time to build their finances.

However, it's important to carefully review the terms of the lease option agreement and work with a real estate attorney to ensure that the agreement is fair and meets your needs.

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