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A lease option is specifically defined as a lease agreement that provides the tenant with the right, but not the obligation, to purchase the property at a predetermined price within a specified timeframe. This arrangement allows tenants to live in a property while having the potential to purchase it later, combining the elements of leasing and purchasing in a single contract. The tenant typically pays an option fee, which may or may not be credited toward the purchase price should they decide to exercise their option to buy.

This approach benefits both parties. The landlord may secure a future sale and provide the tenant with the opportunity to become a homeowner, while the tenant enjoys the flexibility of living in the property they might wish to own, with the chance to lock in a purchase price, which can be advantageous if property values rise over time. This arrangement is particularly appealing for those who may not currently have the full financial means to buy the property outright but still wish to invest in homeownership in the future.