What is a lease-option agreement?

A lease-option agreement is a specific type of contract that provides a tenant the right to purchase the property they are renting at a later date. This agreement typically includes a lease component, which allows the tenant to occupy the property, and an option component, which grants them the ability to buy the property, often at a predetermined price, within a certain timeframe. The structure of a lease-option can benefit both parties: the tenant has a path toward ownership while still living in the property, and the landlord has a committed tenant who is invested in the property's future. This arrangement differs fundamentally from lease agreements that do not include a purchase option, focusing instead solely on the rental aspect.