Contracts
In Massachusetts, a 'lease with option to purchase' gives the tenant:
AAn obligation to purchase after the lease term
BThe right, but not the obligation, to purchase the property at a specified price during or at the end of the lease✓ Correct
CFirst right of refusal on all offers
DAutomatic ownership after 5 years
Explanation
A lease-option gives the tenant the right (but not the obligation) to purchase the property at a set price within a specified time period. Typically a portion of the rent may be credited toward the purchase price.
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Key Terms to Know
Option Contract
A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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