Which option is a variation of the option in which the renter or lessee is given the option of purchasing the leased property at a later date, with part of rental payments applied to the purchase price if agreed?

• A. Call Option
• B. Put Option
• C. Sandwich Lease
• D. Lease Purchase Option

Answer: (D)

A lease purchase option combines renting with a built-in path to ownership. The renter agrees to rent now and gains the right to buy the property later, with a portion of the rent credited toward the purchase price if the parties approve it. This arrangement lets the tenant build equity through rent credits while working toward home ownership, and it can set up a future purchase price or a method to determine it at exercise. It’s different from a pure call option, which is simply the right to buy without any ongoing lease or rent credits, and from a put option, which is the right to sell. A sandwich lease is a different setup where a tenant leases from a landlord and then subleases to another tenant, again not focused on purchasing the property. So the described option is a lease purchase option.