What is the purpose of a lease-option agreement?

A lease-option agreement primarily serves to give a tenant the right, but not the obligation, to purchase a property at a later date, usually after a specified lease period. This agreement typically specifies the terms under which the tenant can buy the property, including the purchase price and the length of time the tenant has to make the purchase. This arrangement benefits tenants who may wish to live in the property before committing to buy, allowing them to evaluate the property and the neighborhood thoroughly while potentially building equity through the rent payments that may contribute to the purchase price.

The other choices do not accurately capture the essence of a lease-option agreement. For instance, securing a lower rental price does not define the purpose of this agreement, as it primarily focuses on the option to purchase rather than rental terms. Immediate purchase of the property is also not a characteristic of a lease-option, as tenants have the choice to buy later rather than being required to do so right away. Similarly, extending lease terms without any purchase options does not reflect the purpose of a lease-option agreement, as the essence lies in providing a potential future ownership opportunity to the tenant.