Which of the following best describes a “lease option” agreement?

A lease option agreement is best described as a rental arrangement that includes a provision allowing the tenant the right to purchase the property at a future date, usually under specified terms and conditions. This type of agreement provides tenants with an opportunity to secure a home while exploring the possibility of buying it. The tenant typically pays an option fee, which gives them the right, but not the obligation, to purchase the property during the lease term or at its conclusion, often at a predetermined price.

This structure is particularly beneficial for tenants who may want to test the property and neighborhood before making a long-term commitment to purchase. It also offers sellers a potential market for their property while generating rental income during the lease period.

The other choices provided do not accurately capture the essence of a lease option agreement. For instance, a contract for services between a landlord and tenant refers generally to the obligations of the lease, which does not directly address the purchasing right inherent in a lease option. An agreement allowing landlords to raise rent annually pertains to the terms of rental increases rather than an option to buy, and a lease requiring payment in advance does not relate to the purchase aspect offered in a lease option but simply to payment terms.