Question 95

A lease option with first right of refusal allows a tenant to purchase the property before the owner accepts an offer from another party.

This arrangement provides the tenant with the opportunity to buy the property, ensuring they have the first chance to make a purchase before the owner can consider other offers.

A) renew the lease with no increase in monthly payments.

This option is incorrect because a lease option with first right of refusal does not specifically grant the tenant the ability to renew the lease without an increase in rent. Instead, it focuses on the tenant's right to purchase the property.

B) purchase the property before the owner accepts an offer from another party.

This option is correct as it accurately describes the essence of a lease option with first right of refusal. It allows the tenant to have the first opportunity to buy the property, effectively protecting their interest in the lease and the potential purchase.

C) remain in the property and pay rent although the mortgagee forecloses.

This option is incorrect because a lease option with first right of refusal does not provide the tenant with rights related to foreclosure situations. It primarily pertains to the purchase of the property rather than the tenant's rights in the event of foreclosure.

D) opt out of the lease if the property is sold.

This option is also incorrect as it does not reflect the nature of a lease option with first right of refusal. This arrangement does not typically allow the tenant to terminate the lease simply because the property is sold.

Conclusion

The correct answer, B, highlights the primary function of a lease option with first right of refusal, which is to give tenants the chance to purchase the property before it is offered to others. Other options do not accurately represent the rights and conditions associated with such an agreement, making them incorrect in this context.