What is a lease option agreement?

A lease option agreement is a type of real estate law in California that allows a tenant to purchase the property they are renting before the end of the lease term. It is an agreement between a tenant and a landlord that specifies the rights and obligations of both parties in a rental agreement. The tenant pays the landlord an option fee, usually around three percent of the purchase price, which is not refundable. This fee gives the tenant the right to buy the property either before or at the end of the lease term. The tenant also makes a monthly rent payment throughout the lease term which goes towards the purchase of the home. The tenant benefits from this agreement by having the ability to purchase the property without having to take out a mortgage. The tenant can move into the home, make improvements, and establish a residence without having to worry about the risk of foreclosure. The landlord benefits from the additional security of the rent payments, as well as the option fee should the tenant decide not to purchase the property. If the tenant does decide to purchase the home, the tenant and landlord will then sign a purchase and sale agreement for the property. The purchase and sale agreement will outline the terms of the sale, such as the purchase price, as well as the rights and obligations of both the tenant and the landlord.

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What is a lease option agreement?

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