Option to Purchase Real Estate
This Option to Purchase Real Estate (the "Option Agreement") is made between [Optionor (owner) name, as on the deed] ("Optionor") and [Optionee (buyer) name or entity] ("Optionee"). Optionor owns the real property at [Property address], in the County of [County], State of [Governing law (state)], legally described as [Legal description or parcel number], together with all improvements and fixtures on it (the "Property"). Optionor wishes to grant Optionee, and Optionee wishes to acquire, an exclusive option to purchase the Property on the terms below. Optionor and Optionee are each a "Party" and together the "Parties".
1. Grant of Option
In consideration of the Option Fee, Optionor grants Optionee the exclusive and irrevocable right and option to purchase the Property at the Purchase Price and on the terms stated in this Option Agreement (the "Option"). During the Option Period, Optionor shall not sell, agree to sell, list, market or grant any other option or right of first refusal over the Property to anyone else. The Option gives Optionee a right, not an obligation, to purchase; Optionee has no duty to exercise it.
2. Option Fee
Optionee shall pay Optionor an option fee of [Option fee] (the "Option Fee") within three (3) business days after both Parties sign this Option Agreement. The Option Fee is consideration for the Option and is non-refundable in every event except Optionor’s default under Section 9, whether or not Optionee exercises the Option. If the Option Fee is not paid when due, this Option Agreement is void. At closing of a purchase under this Option, the Option Fee shall be: [Option fee at closing].
3. Option Period; Extension
The Option may be exercised at any time from [Option period begins] through 5:00 p.m. local time on [Option period ends] (the "Option Period"). Extension: [Extension]. If an extension is available, Optionee may extend the Option Period by giving Optionor written notice and paying an extension fee of [Extension fee (or $0)] before the original Option Period ends; the extension fee is non-refundable and is treated in the same way as the Option Fee at closing. Time is of the essence of the Option Period. If the Option is not exercised as Section 4 requires before the Option Period, as extended, ends, the Option expires automatically and neither Party has any further obligation to the other except under Section 11.
4. Exercise
Optionee exercises the Option by delivering to Optionor, before the Option Period ends, written notice of exercise (the "Exercise Notice") and, within three (3) business days after the Exercise Notice, earnest money of [Earnest money due on exercise] to [Title company or closing attorney] (the "Closing Agent"). On timely exercise this Option Agreement becomes a binding contract for the purchase and sale of the Property on the terms of Section 5, and the Parties shall, within ten (10) days after the Exercise Notice, sign a purchase agreement consistent with those terms in a customary form for the State of [Governing law (state)]; if they do not, this Option Agreement alone is the contract of sale and the Closing Agent may close on it.
5. Purchase Terms
The purchase price is [Purchase price if exercised] (the "Purchase Price"), payable in good funds at closing, less the earnest money and less the Option Fee and any extension fee if Section 2 provides for a credit. The purchase is not contingent on financing or on any further inspection, Optionee having had access under Section 7 during the Option Period, except that Optionee may object to any title matter first appearing of record after the date of this Option Agreement.
Closing shall occur through the Closing Agent within [Closing within (days after exercise)] days after the Exercise Notice, at a date and time the Parties agree, or on the last day of that period if they do not. At closing Optionor shall convey good and marketable fee simple title by general warranty deed, or the deed customary in the County of [County] carrying equivalent warranties, free of all liens and encumbrances other than current taxes not yet due and recorded easements and restrictions existing on the date of this Option Agreement. Optionor shall pay the cost of clearing title and any transfer tax customarily paid by a seller in the County of [County]; Optionee shall pay for the owner’s title policy, recording of the deed and any loan costs; the Closing Agent’s fee is split equally; taxes and assessments are prorated as of closing. Optionor shall deliver possession at closing, subject only to any lease disclosed under Section 6.
6. Optionor’s Covenants During the Option Period
From the date of this Option Agreement until the Option expires or the purchase closes, Optionor shall: keep the Property in its present condition, ordinary wear excepted, and maintain insurance on it; not encumber the Property with any lien, mortgage, easement or restriction, or increase any existing mortgage; not lease the Property or extend or modify any lease without Optionee’s written consent; not remove fixtures, timber or improvements; pay all taxes, assessments and mortgage payments when due; and promptly notify Optionee of any notice of condemnation, code violation, casualty or claim affecting the Property. Current occupancy: [Current occupancy]. Optionor represents that Optionor holds title to the Property, that no other person has any option, contract or right of first refusal to purchase it, and that no lien or lease affects it other than those disclosed to Optionee in writing before signing.
7. Inspection and Access
During the Option Period Optionee and Optionee’s agents, lenders, appraisers, surveyors and contractors may enter the Property at reasonable times, on reasonable notice to Optionor and any tenant, to inspect, survey, test and appraise it, provided Optionee restores any disturbance and indemnifies Optionor against injury, damage and liens arising from the entry. Optionor shall deliver to Optionee within seven (7) days after signing copies of any survey, title policy, lease, inspection report and disclosure relating to the Property in Optionor’s possession, and shall deliver every disclosure the law of the State of [Governing law (state)] requires of a seller of the Property, so that Optionee may review them before exercising.
8. Memorandum; Recording
Recording: [Recording]. If a memorandum may be recorded, Optionor shall sign and acknowledge before a notary, within five (5) days after request, a memorandum of this Option Agreement stating the Parties, the Property, the Option Period and the existence of the Option but not the price, for recording in the County of [County]. Neither Party shall record this Option Agreement itself. On expiration or termination of the Option without exercise, Optionee shall sign and deliver a recordable release of the memorandum within five (5) days after request, and this obligation survives termination.
9. Default; Remedies
If Optionor breaches Section 6, refuses to sign the memorandum when required, or fails to close after Optionee has exercised the Option and tendered performance, Optionee may terminate and recover the Option Fee, any extension fee and the earnest money, together with Optionee’s reasonable inspection, survey, title and loan costs, or may enforce this Option Agreement by specific performance, the Parties agreeing that the Property is unique and damages would be inadequate, and in either case may recover damages for any intentional breach.
If Optionee, having exercised the Option, fails to close because of Optionee’s default, Optionor shall retain the Option Fee, any extension fee and the earnest money as liquidated damages and as Optionor’s sole remedy, and the Option and this Option Agreement terminate. Failure to exercise the Option is not a default. The prevailing Party in any action arising out of this Option Agreement is entitled to reasonable attorney fees and costs.
10. Assignment; Successors
Optionee [May the optionee assign this option?]. Any assignee takes the Option subject to all of its terms, and an assignment does not release Optionee from the obligation to pay any fee due before the assignment. Optionor may not assign this Option Agreement, and any transfer of the Property by Optionor during the Option Period is subject to the Option and requires the transferee to assume Optionor’s obligations in writing. This Option Agreement binds and benefits the Parties and their heirs, successors and permitted assigns.
11. Expiration; Release
On expiration of the Option Period without a timely Exercise Notice and earnest money, or on termination under Section 9, the Option ends without notice, Optionor retains the Option Fee and any extension fee except as Section 9 provides, and neither Party has any further right or obligation under this Option Agreement other than Optionee’s duty to release any recorded memorandum, Optionee’s indemnity under Section 7, and the fee provisions of Section 9. Optionee shall promptly deliver to Optionor, on request, copies of any survey or inspection report Optionee obtained, without warranty.
12. General
This Option Agreement is governed by the laws of the State of [Governing law (state)], where the Property is located. It is the entire agreement between the Parties about the Option and supersedes all prior discussions; it may be amended only in a writing signed by both Parties. If any provision is unenforceable, the rest remains in effect. Notices shall be in writing and are effective on personal delivery, on delivery by email to the addresses in the execution record, or the next business day after being sent by overnight courier, except that the Exercise Notice shall also be sent by a method that provides proof of delivery. Time is of the essence. Each Party represents that it has not dealt with any broker regarding the Property except as disclosed in writing. This Option Agreement may be signed electronically and in counterparts, each an original and together one instrument, and the electronic execution record, timestamps and document fingerprints kept by the signing platform are conclusive evidence of execution.
Signatures
Optionee (buyer) · Optionor (owner)