What is a lease option?

A lease option is a type of residential real estate law agreement in Washington that allows a tenant to rent a property with an option to purchase the property at some point in the future. With this type of agreement, the tenant makes monthly payments to the landlord, just like a typical lease agreement. However, a portion of the monthly payments can go towards the purchase of the property. This means that the tenant is “leasing” the property with the option to buy it in the future, hence the term “lease option.” When the tenant chooses to exercise the option, the tenant will pay the agreed-upon option price, as outlined in the lease option agreement. This price is typically higher than the current market value of the property, as the landlord is being compensated for providing the option agreement. Once the tenant pays the option price, the tenant will own the property. Lease option agreements are beneficial for landlords and tenants in Washington because they provide an opportunity to enter into an agreement without the tenant having to immediately purchase the property. Tenants can save up money to purchase the property and landlords can benefit by receiving an option fee and higher-than-market rental payments.

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