This basically means you are leasing or renting a property with an option to buy it at a future date.  The future price of the property should be fixed at the time the lease-option is signed.

There usually is an up-front payment of some amount to purchase the option.  The amount can vary depending on the length of the option period.  Sometimes the monthly payment is larger than normal and the excess is used to purchase the option.  The option money can be applied toward the down payment for the later purchase of the home.

The option fee is non-refundable should the buyer choose not to exercise their option to purchase. Typically, the buyer cannot assign the lease purchase agreement without the seller's approval.

Next let's look at the benefits for buyers.

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