What is an option to purchase in a lease?

An option to purchase in a lease is a provision that grants the tenant the right to buy the leased property at a predetermined price, either during the lease term or at its conclusion. This option can be beneficial for tenants who are interested in potentially acquiring the property they are leasing, allowing them to take steps toward ownership while occupying the space.

This arrangement provides security and flexibility for tenants, as it enables them to evaluate the property and their business needs before committing to a purchase. If the tenant exercises this option, it typically requires the completion of a formal purchase agreement based on the terms outlined in the lease.

In contrast, a requirement for the landlord to buy back the property does not align with the concept of an option to purchase, as it places the onus on the landlord rather than offering the tenant a purchasing opportunity. An option for lease renewal pertains to extending the rental agreement but does not involve buying the property. A clause for rent reduction under specific conditions addresses rental payments rather than an ownership stake in the leased property. Thus, the most accurate depiction of an option to purchase encompasses the tenant's right to acquire the property at an agreed price, affirming the selection made.