What is a lease option?

A lease option is a legal agreement between a landlord and a tenant in California residential real estate law. Under a lease option, the tenant pays the landlord an option fee in order to have the right to purchase the rental property later on. The tenant can choose to exercise the option to purchase the rental property at certain predetermined terms, such as a predetermined price and a predetermined closing date. The tenant will also pay the landlord rent throughout the duration of the lease option agreement. With a lease option, the tenant benefits from having a fixed price they can purchase the property at, even if the market value of the property increases. The tenant also has the flexibility to decide at any point if they want to exercise the option to purchase the property and they will not have to be bound to the agreement after the option period is up. On the other hand, the landlord will benefit from the option fee and the high rent payments they will receive throughout the lease option agreement. Furthermore, the landlord will have the security of knowing that the tenant won’t be able to purchase the property unless the predetermined terms of the option agreement are met. Lease options are an important legal tool in California residential real estate law and provide landlords and tenants with the legal protection and flexibility they need.

Related FAQs

What are the legal requirements for purchasing a home?
What is a Contract for Deed?
What documents should I keep when buying a home?
What is a restrictive covenant?
What is a real estate lawyer's role in a real estate transaction?
What is a home inspection and why should I get one?
What is a deed of trust with a due-on-sale clause?
What happens if I breach a contract?
What is a private mortgage insurance?
What is a right of first refusal?

What is a lease option?

Related FAQs

Related Blog Posts