Are e-signatures valid for options?

Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided intent, consent, attribution, and retention are established.

Do I need a notary or witnesses?

Not usually required for a basic option contract, but states may require notarization or witnesses for recordable instruments or to create a self-proving affidavit; check local recorder or state law.

How should an exercise notice be delivered?

Follow contract terms—common methods include registered mail, overnight courier, or email with read receipt. Specify recipient, delivery address, and effective delivery time in the agreement.

Can the option be assigned?

Assignment depends on the agreement language; include explicit assignment and notice provisions to permit or restrict transfer and protect both parties' interests.

What happens to the option fee at closing?

The agreement should state whether the fee is credited to the purchase price, retained by the seller, or forfeited on non-exercise to avoid disputes at closing.

How long should records be kept?

Keep executed agreements for at least three years for tax purposes (IRC §6501(a)), longer where state law or industry rules require it or where litigation risk exists.

Electronic Signature
Templates
Legal
Legal Purchase Option Agreement

Legal Purchase Option Agreement

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Legal Purchase Option Agreement

This Purchase Option Agreement ("Agreement") is made and entered into as of by and between Seller Name: with principal address and Buyer Name: with principal address (each a "Party" and collectively the "Parties").

RECITALS

WHEREAS, Seller is the owner of certain real property and improvements described as: (the "Property"); and

WHEREAS, Buyer desires to obtain an exclusive, irrevocable option to purchase the Property, upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Seller is willing to grant such option to Buyer in consideration of the Option Fee and the covenants contained herein.

NOW, THEREFORE, in consideration of the mutual covenants and representations set forth below, the Parties agree as follows:

1. GRANT OF OPTION

1.1 Grant. Subject to the terms and conditions of this Agreement, Seller hereby grants to Buyer the exclusive right and option (the "Option") to purchase the Property during the Option Term (as defined below) for the Option Purchase Price specified in Section 3. The Option shall be exercisable only by Buyer or its permitted assignee in accordance with Section 4.

1.2 Option Fee. In consideration for the grant of the Option, Buyer shall pay to Seller, upon execution of this Agreement, an option fee in the amount of (the "Option Fee"), which shall be non-refundable except as expressly set forth in this Agreement and which shall be applied to the Purchase Price at Closing as provided below.

2. OPTION TERM

2.1 Term. The Option shall commence on and shall expire at 5:00 p.m. local time on (the "Option Term"), unless earlier terminated in accordance with this Agreement.

3. PURCHASE PRICE

3.1 Purchase Price. The total purchase price for the Property if the Option is validly exercised shall be (the "Purchase Price"), payable at Closing as provided in Section 5.

3.2 Allocation. The Option Fee, if credited, shall be applied to the Purchase Price at Closing. Any remaining balance of the Purchase Price shall be paid by Buyer in immediately available funds or as otherwise agreed in writing.

4. EXERCISE OF OPTION

4.1 Election to Exercise. The Option may be exercised only by Buyer delivering written notice of exercise to Seller during the Option Term in accordance with Section 11. Such notice shall specify Buyer’s intent to close the purchase and propose a Closing Date in accordance with Section 5.

4.2 Form of Notice. The notice of exercise shall be effective only if it is signed by Buyer or an authorized representative and delivered in the manner provided in Section 11. The notice must state the full legal name of the person or entity exercising the Option and must be accompanied by a deposit toward the Purchase Price in the amount of unless otherwise agreed.

5. CLOSING

5.1 Closing Date. The closing of the purchase and sale (the "Closing") shall occur on the date mutually agreed by the Parties, which shall be no later than days following Seller’s receipt of a valid notice of exercise, unless otherwise extended by mutual written agreement.

5.2 Closing Deliveries. At Closing, Seller shall deliver to Buyer a general warranty deed (or other appropriate conveyance), free and clear of all liens and encumbrances except those Permitted Exceptions defined as:

5.3 Closing Adjustments. Real property taxes, rents, utilities and other customary adjustments shall be apportioned as of the Closing Date in accordance with local custom and as agreed by the Parties.

6. TITLE; SURVEY; INSURANCE

6.1 Title Commitment. Seller shall deliver to Buyer a commitment for title insurance showing marketable title subject only to the Permitted Exceptions not later than days after the Option is exercised. Buyer shall have the right to object to Title Matters within days of receipt.

6.2 Survey and Insurance. Buyer may obtain a survey and property insurance at Buyer’s expense. Seller shall cooperate to the extent necessary to permit issuance of title insurance and transfer of title at Closing.

7. REPRESENTATIONS AND WARRANTIES

7.1 Seller’s Representations. Seller represents and warrants to Buyer that: (a) Seller is the lawful owner of the Property and has full power to enter into and perform this Agreement; (b) there are no actions, suits, proceedings or liens that would materially impair Seller’s ability to convey the Property; and (c) Seller has not granted any prior option, purchase right, or other encumbrance affecting the Option.

7.2 Buyer’s Representations. Buyer represents and warrants to Seller that: (a) Buyer has the authority to enter into this Agreement; (b) Buyer is not insolvent and has the financial capacity to perform its obligations at Closing subject to any financing contingency expressly set forth in writing; and (c) any information furnished by Buyer to Seller in connection with this Agreement is true and correct in all material respects.

8. DEFAULT; REMEDIES

8.1 Buyer Default. If Buyer fails to timely and properly exercise the Option, or fails to close after valid exercise (other than due to Seller’s uncured breach), Seller’s sole remedy shall be to retain the Option Fee as liquidated damages and not as a penalty, and this Agreement shall terminate, unless Seller elects to pursue specific performance or other equitable relief where permitted.

8.2 Seller Default. If Seller fails to perform its obligations at Closing, Buyer may seek specific performance, damages or other remedies available at law or in equity. The Parties acknowledge that injunctive relief may be appropriate to enforce Buyer’s rights under this Agreement.

9. TAXES; PRORATIONS

All real property taxes, assessments and similar governmental charges shall be prorated as of the Closing Date. Any transfer taxes or documentary stamp taxes arising from the conveyance shall be paid by , unless local law provides otherwise.

10. NOTICES

Seller Notice Address

Buyer Notice Address

Notices under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by nationally recognized overnight courier, or three (3) business days after deposit in the U.S. mail, postage prepaid, addressed to the Party at its notice address set forth above or at such other address as a Party may designate by written notice to the other Party.

11. ASSIGNMENT

Neither Party may assign this Agreement or any rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld; provided, however, that Buyer may assign its rights to an affiliate or to a purchaser acquiring substantially all of Buyer’s assets upon written notice to Seller.

12. MISCELLANEOUS

12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state in which the Property is located, without regard to conflict of law principles.

12.2 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.

12.3 Severability. If any provision of this Agreement is held invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions which shall remain in full force and effect.

12.4 Amendments; Waiver. This Agreement may be amended or modified only by a writing signed by both Parties. No waiver shall be effective unless in writing and signed by the waiving Party.

12.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Signatures delivered by electronic transmission shall be effective as original signatures.

13. ADDITIONAL PROVISIONS

13.1 Confidentiality. The Parties agree to keep the terms of this Agreement confidential, except as required by law or as reasonably required to consummate the transaction.

13.2 Further Assurances. Each Party shall execute and deliver such further instruments and take such further actions as may be reasonably necessary to effectuate the transactions contemplated by this Agreement.

Additional Terms (optional)

Seller

Party Label:

By:

Date:

Buyer

Party Label:

By:

Date:

What a Legal Purchase Option Agreement Is

A Legal Purchase Option Agreement is a written contract granting one party the right, but not the obligation, to buy specified property or assets from another party on predefined terms within a set period. Commonly used in real estate and commercial transactions, the agreement describes the option fee, purchase price or pricing formula, exercise window, and any conditions precedent. When properly executed it creates enforceable rights that survive assignment and can be recorded where required. Parties should confirm requirements for notarization, recording, and witness signatures under applicable state law before relying on the agreement.

Why a Purchase Option Agreement Matters

A Purchase Option Agreement locks in key deal terms—price, timing, and obligations—while allowing flexibility for the option holder. It allocates risk, clarifies consideration, and can preserve priority for later purchase or financing. Ensure the agreement addresses exercise mechanics and dispute resolution, and confirm electronic execution is allowed under the ESIGN Act (15 U.S.C. §7001) and the Uniform Electronic Transactions Act (UETA) where adopted.

Who Typically Prepares or Signs This Agreement

The Purchase Option Agreement is used by parties who want to secure future purchase rights without immediate transfer of ownership.

Real estate investors and landlords seeking a controlled sale window and priority purchase rights.
Buyers in commercial deals who want time to arrange financing or complete due diligence.
Lenders, developers, and legal counsel who draft, review, or monitor option conditions and recording.

Core Elements to Include in a Professional Agreement

A robust Purchase Option Agreement is clear about parties, property, timing, money, and post-exercise obligations to reduce dispute risk and support enforceability.

Parties

Identify optionor and optionee with full legal names and entity types, including state of formation for companies and any authorized signatory details.

Property Description

Provide a precise legal description or asset identifier (parcel number, VIN, inventory SKU) so the subject of the option is unambiguous and recordable if required.

Option Consideration

State the option fee, payment timing, and whether it is credited to purchase price or non-refundable; explain consequences of nonpayment.

Exercise Window

Specify the start and end dates, any notice requirements to exercise, and acceptable delivery methods for exercise notices (mail, email, e-signature).

Purchase Price Formula

Fix the price or define a formula or appraisal method; include allowances for adjustments, taxes, assessments, and closing costs.

Recording & Remedies

Address whether the option will be recorded, default remedies, assignment rights, and dispute resolution (jurisdiction and governing law).

Information Required on the Agreement

Full Legal Names: Exact names of parties

Property ID: Legal description

Option Fee: Dollar amount

Exercise Deadline: MM/DD/YYYY

Purchase Terms: Price or formula

Governing Law: State name

Step-by-Step: How to Complete the Agreement

Follow a consistent order to reduce errors: identify parties, describe property, set consideration and timing, define exercise mechanics, and include signature blocks and witness/notary provisions if required.

01

Identify Parties: Enter full legal names and entity details.
02

Describe Property: Use the legal description or unique identifier.
03

Set Terms: Specify fee, price, and payment mechanics.
04

Sign and Date: All signatories must sign and date per the chosen execution method.

How to Customize and Complete the Agreement Online

When preparing the agreement in a document platform, configure fields for names, dates, amounts, and conditional clauses to guide signers and reduce manual errors.

Field	Configuration
Party Name Fields	Auto-fill from contact record and validate against entity registry.
Date Fields	Use MM/DD/YYYY with calendar picker and validation.
Monetary Fields	Format as USD with two decimals and calculation rules.
Conditional Clauses	Display exercise instructions only when option is active.

Where to Send and File the Completed Agreement

Routing depends on the transaction: parties typically retain executed originals, record real property options where required, and provide copies to lenders or title agents.

Original to Seller: Seller keeps original signed agreement.
Buyer Copy: Buyer retains a signed counterpart.
Title Company: Provide copy if option affects title or will be recorded.
Recorder's Office: Record only if state law or lien priority requires it.

Digital Signing and Distribution Considerations

Use an e-signature platform that supports audit trails, secure storage, and the authentication level your transaction requires.

Audit Trail: Capture IP, timestamps, and actions.
Authentication: Email, SMS, or stronger ID verification.
File Formats: Support for PDF and DOCX preferred.

Key Deadlines and Timing Expectations

Timelines are typically contractual but may interact with statutory deadlines for recording, tax reporting, or licensing when the option is exercised and a conveyance occurs.

Exercise Deadline:

Date by which option must be exercised (MM/DD/YYYY).

Notice Period:

Number of days' notice required to exercise.

Option Fee Due:

Due date for initial consideration payment.

Closing Window:

Period between exercise and closing date.

Recording Deadline:

If recorded, follow county recorder timing rules.

Common Preparation Mistakes to Avoid

Vague property descriptions that lead to disputes over the optioned asset and cloud enforceability.
Unclear exercise procedures—failure to specify notice method, deadline, or required formality for exercise.
Missing consideration language or ambiguity on whether the option fee credits to purchase price.
Ignoring recording or notarization rules in jurisdictions where priority or public notice is necessary.

Risks and Consequences of an Incorrect Agreement

Unenforceable Terms: Ambiguity may void the option

Loss of Priority: Failure to record can affect lien priority

Tax Consequences: Improper reporting may trigger IRS penalties

Deposit Forfeiture: Non-exercise may forfeit option fee

Contract Disputes: Litigation costs and delay

I-9/Employment: Not typically applicable

How This Agreement Differs from Similar Documents

Compare commonly confused instruments to clarify when a Purchase Option Agreement is the appropriate document versus alternative forms.

Criteria	Purchase Option Agreement	Lease Agreement
Purpose	right to buy	convey possession
Obligation to Buy		yes (for lease-purchase)
Consideration	option fee	rent payments
Recording	sometimes	sometimes

eSignature Vendor Pricing and Feature Snapshot

Basic vendor pricing and feature availability for executing Purchase Option Agreements electronically; signNow is listed first per vendor comparison conventions.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No
Envelope Cap	No cap	100 envelopes/user/year	Varies by plan	Varies by plan	Varies by plan

Frequently Asked Questions About Purchase Option Agreements

Answers to common legal and practical questions when preparing, executing, or enforcing a Purchase Option Agreement.

Need help? Contact support

Are e-signatures valid for options?
Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. §7001) and UETA where adopted, provided intent, consent, attribution, and retention are established.
Do I need a notary or witnesses?
Not usually required for a basic option contract, but states may require notarization or witnesses for recordable instruments or to create a self-proving affidavit; check local recorder or state law.
How should an exercise notice be delivered?
Follow contract terms—common methods include registered mail, overnight courier, or email with read receipt. Specify recipient, delivery address, and effective delivery time in the agreement.
Can the option be assigned?
Assignment depends on the agreement language; include explicit assignment and notice provisions to permit or restrict transfer and protect both parties' interests.
What happens to the option fee at closing?
The agreement should state whether the fee is credited to the purchase price, retained by the seller, or forfeited on non-exercise to avoid disputes at closing.
How long should records be kept?
Keep executed agreements for at least three years for tax purposes (IRC §6501(a)), longer where state law or industry rules require it or where litigation risk exists.

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