When many people think about leases, they’re not necessarily thinking about making a purchase. They might be leasing an apartment, fully intending on moving out upon the end of the lease. They might be leasing a car, understanding that the situation feels a bit more like a “long-term rental” situation. But there are a great many people who don’t view things that way - because they want to achieve ownership. These are the people who look at the lease as a means to an end, that there is the light of ownership at the end of the tunnel. How do they accomplish that? By agreeing to a lease with an option to purchase. Let’s learn more about this agreement.

First, to understand just how prevalent the “option to purchase” is in our society, it’s important to understand why we have a different term for both “renting” and “leasing.” Although some leasing terms will basically work out to a rental situation, in many cases a lease with an option to purchase will be the “default” agreement you’re expected to sign, such as when you lease a car. Many car dealerships, for example, count on you enjoying the car you lease and hope that when it comes time to decide whether or not you want to purchase it, you’ll simply be too “used” to the car by then and will want to keep using it. That’s a good example of a lease with an option to purchase that can work out well for both parties.

It is less common in real estate, but it certainly exists under certain agreements. What’s important to understand about leases with an option to purchase is that you will often get “first rights” to make the purchase if that’s what you want to do. To use our car example from the previous paragraph, remember that the car dealership will often sign an agreement that says it has to sell to you, for a reasonable price, if you do decide to exercise the option to purchase. That’s part of the power of this purchasing option attached to a lease, and it’s partially why so many people like this kind of arrangement.

What if you have a lease but no option to purchase at the end of it? Then you’ll have to work out something with the person you’re leasing from. For example, let’s say you lease piece of property without the option to purchase. What should you do? Before your lease is up, make your intentions to purchase known to the owner (note: it helps to make your decision ironclad before you do this, so you don’t waste anyone’s time). They will often be glad to make any sale at all unless they have some sort of prior arrangement for the property. At the very least, you’ll know what will happen to the property when your lease is up, and you can make plans accordingly.