What is an OPTION?

First, let's clear up some "slang" terms often used with these that create confusion: Rent to Own, Lease Option, Lease with Option to Purchase all mean the same thing in general usage. A lease is simply a rental agreement that is established for a set period of time (e.g. twelve months required rental period); rent is often used to refer to month to month situations.

An option is a grant of the right to purchase property, at set price and terms, from the owner of the property. The person who receives the option can (but is not required to) purchase the property during a set period of time agreed to by both parties when they enter the option.

An option is different from an agreement to sell (Purchase Agreement). Under an option, the seller agrees to sell, but the buyer does not agree to buy; the buyer simply has the option of buying during the option period. A Purchase Agreement provides that the buyer agrees to buy and the seller agrees to sell.

NOTE: In an Option, the Seller is the Optionor (The one who gives the Option) and the Buyer is known as the Optionee (The one who receives the Option).

What is needed to SET UP a Lease with Option to Buy?

To set up a Lease with Option to Purchase with a tenant, you will need all of the documents you would normally use to set up a simple rental/lease: