What is Lease Options?
A lease option is a purchase option with the added freedom for the holder to lease or use the property during the option period. Having a Lease option gives the holder the right to buy or sell the property at an agreed price after a specified period. The holder usually pays a premium to be granted this right, but is not obliged to exercise it. A lease option agreement involves a tenant being given the option to buy a property at an agreed price at the end of a given rental period, usually three to six years. In a lease-option, a Tenant has the option of purchasing the property but the seller does not.
The renter-buyer pays a consideration up front, but at 2-3% of the market value of the property this is preferable to putting up a full deposit of 5-20% straight away. A Lease Option can be explained as a secure, binding document which allows for the sale of a house to happen under certain terms. It is used in both residential and commercial properties.