What is a lease option?

A lease option is a type of residential real estate agreement commonly used in Virginia. It is a contract between a tenant and a landlord, where the tenant has the option to purchase the property from the landlord at a predetermined price. The tenant typically pays a one-time option fee to the landlord which grants the tenant the right to purchase the property at an agreed-upon price within a certain period of time. In a lease option, the tenant pays monthly lease payments to the landlord and may also pay an additional amount of money to the landlord each month as a credit toward the purchase of the property. This extra amount is known as the “rent credit” and the tenant can apply it to the purchase price of the property when they exercise their option to purchase. In Virginia, there are certain requirements for a lease option agreement to be legally binding. For example, the tenant must be given certain notices regarding their rights and obligations and the lease must be in writing and state the terms of the agreement. Additionally, both parties must agree to the terms of the agreement and the tenant must pay the option fee before the agreement can become valid and enforceable.

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