What does "lease option" refer to in real estate?

A "lease option" is a specific type of real estate agreement where a tenant is given the right to purchase the property at a later date, usually after a predefined period. This arrangement often includes terms outlining the purchase price or parameters for determining the price in the future, thus providing the tenant the opportunity to secure the property while renting it.

The concept of a lease option combines elements of leasing and purchasing, making it distinct. It allows tenants to live in the property and simultaneously work toward ownership, which can be particularly advantageous for those who may not be in a position to purchase outright due to financial constraints or the need to improve their credit score.

Other choices describe different aspects of lease agreements but do not accurately capture the essence of a lease option. For instance, subleasing a property does not provide the tenant with purchase rights; a discounted rental rate pertains only to the cost of renting, and flexible terms relate to the structure of the lease without any ownership implications. Thus, the definition of a lease option is specifically aligned with providing a tenant the right to buy the property in the future, making it the correct answer.