Option, For Real Estate
Real Estate Option
_________________________, referred to as SELLER, grants to BUYER the exclusive right to purchase the following parcel of real estate situated in __________________________ County, State of __________________________:
___________________________until _____________________, upon the terms and conditions stated herein.
The Buyer may obtain a single extension of this exclusive option for a period of _________________ by the payment of a sum of $ ____ (______________________& ___/100 Dollars) before the expiration of the original term of the option herein.
The Buyer may exercise this option by notice to the owner. The sales price shall be a total of $_______ (______________________& ____/100 Dollars).
Any and all sums paid for obtaining this option shall be considered as earned fully by the owner when paid and the Buyer, _________________________, shall not receive credit therefore towards the purchase price.
Upon exercise of this option by Buyer, a closing shall take place within _________________________ days. The seller shall convey to the owner by warranty deed the property herein, and the title thereto shall be merchantable.
During the period between exercise of the option by the buyer and the closing the premises shall be adequately insured for fire and other perils by the owner.
The following closing costs shall be borne by the SELLER:
_________________________The following closing costs shall be borne by the BUYER:
__________________________
Dated: _____________________
SELLER, Optionee Witnesses as to SELLER
_____________________________ _________________________
_____________________________ _________________________
Dated: ______________________BUYER, Optionor Witnesses as to BUYER
_____________________________ _________________________
_____________________________ _________________________
Real Estate Option
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This is a standard real estate option agreement, which can cement a good or bad deal, depending on the business circumstances.
1. Make multiple copies. Give a copy to each signatory. Keep one in the transaction file. If this is a major transaction for you, consider the additional protection of getting a notarized signature.
2. Modify the terms of the agreement as appropriate.
Frequently Asked Questions
What is a real estate option?
A real estate option is a contract in which a seller grants a buyer the exclusive right to purchase a specified parcel of real estate within a certain time frame. The buyer pays for this right and can exercise the option by notifying the owner. The terms and conditions of the option are stated in the agreement.
How does a buyer exercise a real estate option?
The buyer may exercise the option by giving notice to the owner. This notice must be given before the option expires. The article specifies that the buyer can exercise the option by notice to the owner.
Can a real estate option be extended?
Yes, the buyer may obtain a single extension of the exclusive option. The extension is for a specified period and requires payment of a certain sum before the original term expires. The exact duration and amount are to be filled in the agreement.
Is the option fee credited toward the purchase price?
No, any sums paid for obtaining the option are considered fully earned by the owner when paid. The buyer does not receive credit for those sums toward the purchase price. This is explicitly stated in the option agreement.
What happens after the buyer exercises the option?
Upon exercise of the option, a closing must take place within a specified number of days. The seller must convey the property by warranty deed. The title must be merchantable.
What type of deed is used to convey the property?
The seller shall convey the property by warranty deed. This is stated in the option agreement. A warranty deed provides certain guarantees about the title.
What does merchantable title mean in a real estate option?
Merchantable title means that the title is free from reasonable doubt and can be readily sold or mortgaged. The article states that the title shall be merchantable upon conveyance. This ensures the buyer receives clear ownership.
How is the sales price determined in a real estate option?
The sales price is a total amount specified in the option agreement. It is filled in as a dollar figure. The buyer and seller agree to this price upfront.
What is the exclusive right to purchase in a real estate option?
The exclusive right to purchase means that the seller cannot sell the property to anyone else during the option period. The buyer has the sole right to buy the property. This exclusivity is granted by the seller to the buyer.
What are the typical terms and conditions of a real estate option?
The terms and conditions include the option period, extension options, sales price, closing timeline, and deed type. The article outlines these elements. Specific details are left blank to be filled in by the parties.
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