I am currently in a Residential lease until August 2008. I just received word from landlord that she will be putting residence up for sale in one or two months. Can she do so while the lease is still in effect? What are my rights? She is giving me the option to purchase; however I have no intentions of doing so.

Yes the landlord owns the property and my sell it at anytime they wish,
If you have a written lease, the new owner will have to accept and honor it. You will be required to allow people in with notice to show the home