Question

Ezra's lease on his condo includes an option to purchase. He told his landlord, Sherm, that he's ready to purchase the condo, and they've negotiated a purchase price and closing date. What kind of contract is this?

a. Lease-purchase agreement
b. Lease assignment
c. Lease renewal
d. Sublease

Answer 1

Ezra's agreement with Sherm to buy the condo after his lease ends is a lease-purchase agreement, a special contract blending rental and purchase options.

Step-by-step explanation:

Ezra's arrangement to purchase the condo at the end of his lease term with his landlord, Sherm, constitutes a lease-purchase agreement. This type of contract is a combination of a residential lease and a real estate sales contract, where the tenant has the option, but not the obligation, to purchase the property at a predetermined price by a specified date.

It is unique compared to other contractual arrangements such as lease assignment, lease renewal, and sublease, as it gives the tenant an opportunity to buy the property they have been renting.