How does a lease differ from a purchase agreement?

A lease and a purchase agreement serve fundamentally different purposes in real estate transactions. The key distinction lies in the nature of the arrangement: a lease provides a temporary right to use property, typically for a specified duration, allowing the tenant to occupy and use the property while the owner retains ownership. In contrast, a purchase agreement is a legal document that facilitates the transfer of ownership from the seller to the buyer, granting the buyer full rights over the property.

The temporary use aspect of a lease means that it has a defined start and end date, whereas a purchase agreement signifies a permanent transaction, marking the complete transition of property rights. This inherent difference shapes the obligations and rights of the parties involved—tenants in a lease have limited rights for the duration of the agreement, while buyers in a purchase agreement are entitled to all legal rights associated with ownership.

This understanding clarifies why the other options do not accurately capture the distinction between a lease and a purchase agreement. Options that suggest leases are indefinite or require a down payment do not reflect the established definitions and intentions behind either document. Additionally, while many purchase agreements are written for clarity and legal security, leases can also be formalized in writing or made verbally, which does not undermine the central distinction outlined in the correct