What does "leaseback" mean in real estate?

In real estate, a "leaseback" refers to an arrangement where the seller leases the property back from the buyer after the sale. This kind of arrangement is often made to allow the seller to continue using the property for business operations or personal needs even after the ownership has changed hands. It provides liquidity to the seller, who can obtain capital from the sale while still maintaining occupancy of the property.

This practice is particularly beneficial for businesses that need to free up cash while still requiring physical space to operate. By structuring the transaction this way, sellers can avoid the immediate disruption that might occur if they had to vacate the premises upon sale. Additionally, buyers may find leasebacks attractive as they can receive a steady rental income from the seller, who is typically a reliable tenant due to their ongoing relationship with the property.

The other choices do not accurately capture the essence of a leaseback. Leasing commercial space focuses on the act of renting without detailing the specific relationship between seller and buyer after the sale. A method of incentivizing buyers involves tactics used to encourage purchase decisions rather than the post-sale leasing aspect and does not relate to the concept of leaseback at all. Lastly, a type of short-term rental agreement typically refers to agreements such as vacation rentals or