An option essentially means exactly what you would think: a choice or a selection. When it comes to a contract you can essentially choose or select a certain option. An option differs from a condition in the sense that a condition implies that a particular party must make an effort to satisfy the condition in order for the contract to be binding. With an option, though, there are no obligations that have to be fulfilled in order for the agreement to be binding. An option is therefore unilateral in the sense that only one party can make use of it. Generally, though, when dealing with an option in a contract, both parties will impose certain conditions before the option is allowable. An option can either be exercised, which means it is used and the option contract (in this case the purchase and sales agreement) therefore becomes a binding bilateral agreement, or it can be forfeited.
Also referred to as Option Money. This may be exchanged from an optionee to an optionor as a deposit at the beginning of a lease option agreement. This money may be credited back (in whole or a portion) by the optionor to the optionee should the optionee exercise the option to purchase the property as part of the down payment.
The party that is occupying the property and making monthly payments to the optionor in a lease option arrangement. They have the option to purchase the property or walk away from the agreement at the end of the agreement term.
The party that is offering a property in a lease option. Generally they are the home owner. They must sell the property to the optionee if the optionee exercises their option to purchase during the term of a lease option agreement.