Legal Question in Business Law in California

Re: contract

What matters is what the contract says, not what you call it. There is no standard definition of either a rent-to-own contract or an option-to-buy contract. Your question asks whether these non-existant definitions are identical. There is no way to answer that question.

Either of the types of contracts you have in mind can be written in a variety of ways. It is possible that some pairs will be indistinguishable from one another and that others will have vast differences.

Re: contract

No, leasing an item just creates a temporary possession and use relationship between the lessor and the lessee usually for a monthly fee. The lessor retains the right of reversion of the leased item at the end of the agreement, subject to any buyout provision stated in the written lease, if any.

Re: contract

Both of the preceding answers are helpful, but they seem to be a little conflicting. Maybe this will help, or maybe create more confusion:

First, the title on a document might have some importance in interpreting the document itself. Examples I can think of are a negotiable vs. non-negotiable promissory note may depends on its title, and perhaps a grant deed vs. a quitclaim deed in some cases. Usually, however, the title is of little relevance. I have a case right now where what is titled a promissory note is really a partnership agreement, since it outlines a joint business deal where the amount to be paid by one party to the other depends on the venture's profits.

"Rent to own" is a non-legal term used as a label on a variety of plans used by (for example) furniture dealers to move their wares to customers that can't, or don't want, to pay cash. If examined under a legal microscope, these deals might be conditional sales agreements, financing leases, true rentals, or rentals or leases with various options, one of which might be an option to terminate the rental by purchase or by returning the goods early (and payment of a big fee).

An option to buy, on the other hand, is a stand-alone concept that can also be coupled with a rental or lease. I can have an option to buy crude oil in December, for example. That doesn't mean I have to take delivery of the oil now, or ever; I'm not renting the oil, I'm just speculating that when December comes, my option price will look like a bargain and I'll make a profit. So, an option to buy, without more, does not give the option holder possession. Rent-to-own does. That's a big difference.

Of course, there can be an option to buy coupled with a rental or lease. That would generally make it within the definition of "rent to own," but only because "rent to own" is a fuzzy concept without a precise legal meaning.