What is the difference between a lease with option to purchase and an option to purchase?

A lease with option to purchase and an option to purchase are two distinct forms of purchase agreements in residential real estate law in California. The main difference between the two is that a lease with option to purchase is a lease agreement between a landlord and a tenant that grants the tenant the right to purchase the leased property at a specified price before the end of the lease term, while an option to purchase is an agreement between two parties (usually the tenant and the landlord) that grants the option holder the right to purchase the property on or before an agreed-upon date and for an agreed upon price. A lease with option to purchase includes rental payments, which are paid by the tenant to the landlord. Those rental payments are typically credited toward the overall purchase price of the property. This is attractive to tenants who may not be able to purchase the property outright, but may be interested in eventually owning it. An option to purchase, on the other hand, does not involve any rental payments. Instead, the tenant pays an option fee to the landlord, granting them the option to purchase the property on or before a predetermined date for a predetermined price. This type of arrangement is beneficial to the landlord, who is assured that someone has made a commitment and that their property will be purchased if the option to purchase is exercised.

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What is the difference between a lease with option to purchase and an option to purchase?

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