What does the term "lease option" mean in real estate?

In real estate, a "lease option" refers to an agreement that grants a tenant the right to purchase the property at a later date while they are renting it. This arrangement typically includes a specific period during which the tenant can exercise the option to buy the property, often at a predetermined price. The lease aspect of this agreement allows the tenant to live in and maintain the property while also providing an opportunity for homeownership in the future.

This type of option is beneficial for both parties; the tenant gets to test out living in the home and can secure a purchase price in advance, while the property owner may receive steady rental income and potentially sell the property without having to list it on the market later.

The other options, while real estate concepts, do not accurately define "lease option." For instance, a long-term rental agreement describes an extended lease term but lacks the purchase component. A standard rental agreement simply involves renting without any intent to purchase, and a sale contract for immediate purchase assumes that ownership is transferred right away, which does not align with the concept of a lease option.