Lease Option
A lease option gives a tenant the right, but not the obligation, to buy the property later at agreed-upon terms while renting it in the meantime — used when a buyer needs time to qualify for financing.
The tenant pays rent (sometimes with a portion credited toward a future down payment) plus an upfront option fee that's typically non-refundable if they choose not to exercise the purchase option.
California courts scrutinize lease options that function like disguised installment sales, and specific disclosure and recording rules can apply depending on how the agreement is structured — this is not a do-it-yourself contract.
A lease option can widen the buyer pool to include tenants who aren't mortgage-ready yet, but it ties up the property for the option period and shifts maintenance and risk in ways that need careful drafting. Sellers who want certainty and a faster close often compare this path directly against a straightforward cash sale.
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