Can an Option Agreement be e‑signed?

Yes. Electronic signatures are generally enforceable under the federal ESIGN Act (15 U.S.C. §7001) and UETA where adopted; ensure intent, consent, attribution, and retention to meet the legal validity test.

Is notarization required for validity?

Not always. Notarization or recording may be needed depending on the asset and state law; if a closing requires notarization, consider in-person or permitted RON procedures to meet state rules.

How do you amend an Option Agreement?

Use a written amendment signed by the same authorized parties. Include effective date and reference the original agreement; record the amendment with the same care as the original execution.

How can an option be revoked?

Revocation depends on contract terms; absent a unilateral revocation clause, mutual written agreement or exercise failure typically ends the option. Consult counsel when the agreement provides specific revocation mechanics.

What happens if a party lacks signing authority?

A signature by an unauthorized signer risks invalidation. Require a certificate of incumbency or corporate resolution to confirm authority before closing to prevent this defect.

How long should records be kept?

Retain executed agreements, audit trails, and closing files for statutory periods: at least three years for IRS purposes (IRC §6501(a)), six years for HIPAA where applicable (45 CFR §164.530(j)), and longer where state law or industry rules require it.

Option Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

What an Option Agreement Is and when it applies

An Option Agreement is a legally binding contract that gives one party the right, but not the obligation, to buy or sell specified assets or property at predetermined terms within a set period. Typical uses include real estate purchase options, stock or share options, and rights to acquire intellectual property or business assets. The agreement specifies the option period, exercise price, consideration paid for the option, conditions to exercise, and post-exercise obligations. Properly drafted, it allocates risk, sets notice procedures, and defines remedies if a party fails to perform.

Why an Option Agreement matters for transactions

An Option Agreement creates a controlled window to secure future rights without immediate transfer of ownership. It preserves negotiating leverage, clarifies price and timing, and limits execution risk. For buyers, it secures exclusivity; for sellers, it can provide nonrefundable consideration and a predictable schedule for performance or sale.

Who typically drafts, signs, or reviews an Option Agreement

Several roles are commonly involved in preparing and approving an Option Agreement depending on the asset and industry.

Buyers and investors seeking exclusive purchase rights for property or securities.
Sellers, issuers, or property owners granting conditional rights to a counterparty.
Attorneys, corporate counsel, or transaction managers who draft terms and confirm enforceability.

Ensure decision-makers, authorized signers, and any required corporate officers are identified before signing to avoid execution defects.

Essential components to include in a professional Option Agreement

A complete Option Agreement defines the parties, what is being optioned, the option period, exercise mechanics, consideration, conditions precedent, and remedies. Include clear procedures for notice and delivery, dispute resolution, and governing law.

Parties

Full legal names and entity types of grantor and grantee, including state of organization and contact details for notices.

Optioned Asset

Precise description of the asset or property, including legal descriptions, units of stock, or attached schedules identifying serial numbers or parcel IDs.

Option Period

Start and end dates expressed as MM/DD/YYYY with any renewal windows and time-of-day cutoffs for exercise.

Exercise Terms

How to exercise (written notice, deposit, form), required deposits or escrow, and timing for closing after exercise.

Consideration

Amount or consideration paid for the option, refundability, credit toward purchase price, and handling of forfeiture.

Governing Law

Specify the state law that governs interpretation, and whether disputes go to arbitration or court with venue identified.

Key security and compliance items to track

Encryption: TLS 1.2/1.3 in transit

Data at Rest: AES-256 encrypted storage

Certifications: SOC 2 Type II available

Regulatory: ESIGN and UETA compliant

Health Data: HIPAA with BAA available

Audit Trail: Detailed signer event logs

Step-by-step: how to complete an Option Agreement

Follow a consistent sequence to reduce errors: verify parties, confirm the asset, set dates and amounts, and collect authorized signatures and proof of authority.

01

Verify parties: Confirm legal entity names and officer authority
02

Describe asset: Use precise legal or parcel descriptions
03

Set terms: Enter option period, exercise method, and price
04

Execute: Obtain signatures and required notarization

Customizing the online workflow for an Option Agreement

Configure routing, authentication, and conditional fields so the Option Agreement executes cleanly and enforces required approvals.

Field	Configuration
Signing Order	Set sequential or parallel routing
Authentication Level	Select email, SMS code, or advanced auth
Conditional Fields	Display fields only after prerequisites complete
Document Retention	Enable audit trail and secure storage

Digital signing and delivery considerations

Confirm platform features and signer authentication before sending the agreement to preserve legal validity and auditability.

File formats: PDF, DOCX supported
Integrations: CRM and storage connectors
Auth options: Email, SMS, or KBA

Choose a platform that supports audit trails, optional notarization or RON, and secure long-term storage to meet legal and industry requirements.

Common timing and deadline considerations

Option Agreements hinge on strict timing. Note the effective, expiration, exercise, notice, and closing deadlines and format them clearly to avoid disputes.

Effective Date:

When the option rights begin, shown as MM/DD/YYYY

Expiration Deadline:

Final date and time by which exercise notice must be received

Exercise Window:

Period during which the option can be validly exercised

Notice Period:

Time required between notice and closing, if specified

Closing Date:

Date by which purchase must be completed after exercise

Penalties and risks from errors or omissions

Lost Rights: Missed expiry forfeits option

Forfeited Consideration: Option fee may be nonrefundable

Enforceability Risk: Ambiguous terms invite litigation

Tax Exposure: Improper reporting creates liabilities

Authority Defect: Unsigned officer signatures invalid

Recordkeeping Failure: Loss of proof of execution

Real-world examples of Option Agreement use

Below are two representative use cases drawn from organizations that use digital signing and structured option terms.

Martin Properties

A small property manager used an option to secure a future purchase while marketing a building.

The option fee reserved purchase rights pending due diligence.
By documenting exercise mechanics and using clear closing timelines, the manager avoided competing offers and completed the sale within the stated window while preserving tenant stability.

Tech Data

A distributor negotiated an option on exclusive supply of hardware for a new territory.

The option granted first refusal and set price bands.
With defined notice procedures and automated reminders, parties executed exercise notices on time and settled payment terms according to the contract schedule.

Typical routing and filing steps after execution

After signatures are collected, follow a clear routing plan to finalize recordkeeping and any public filings.

Deliver executed copies: Send signed PDFs to all parties and counsel
Upload to repository: Store in secure document management system
Record or escrow: Record instrument or place funds in escrow if required
Set reminders: Schedule expiration and exercise alerts

Practical tips to reduce disputes and improve enforceability

Adopt consistent drafting and execution practices to limit later disagreement and to support electronic execution where permitted.

Use precise, objective language

Draft the asset description, pricing, and timing in unambiguous, measurable terms. Replace vague references (for example, "reasonable efforts") with defined standards or timelines to reduce interpretation disputes and protect enforceability.

Specify notice and exercise method

State the required delivery method and address for exercise notices, including whether email is acceptable and the effective time of receipt; clarify how to compute notice periods in business days and time zones.

Confirm signing authority

Require a corporate resolution or officer certificate for entity signers when appropriate, and include capacity statements in signature blocks to prevent challenges to authority later.

Preserve the audit trail

Keep timestamps, IP addresses, signer authentication records, and version history. These records support attribution and consent elements for e-signature validity under ESIGN and UETA.

Key milestones from option grant through closing

Track milestones as numbered steps to keep the option lifecycle on schedule and preserve rights.

01

Grant Date

Option becomes effective and consideration is paid

02

Due Diligence Period

Buyer inspects asset and satisfies contingencies

03

Exercise Notice

Buyer delivers formal notice per agreement terms

04

Closing

Purchase completes and title or assets transfer

Comparing common eSignature vendors for Option Agreement workflows

Basic pricing and feature availability vary across eSignature providers; signNow is listed first per comparison conventions below.

	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	Yes, 7-day trial	Varies by plan	Varies by plan	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently asked questions about Option Agreements and e-signatures

Questions and concise answers addressing enforceability, amendment, notarization, revocation, and recordkeeping for Option Agreements.

Need help? Contact support

Can an Option Agreement be e‑signed?
Yes. Electronic signatures are generally enforceable under the federal ESIGN Act (15 U.S.C. §7001) and UETA where adopted; ensure intent, consent, attribution, and retention to meet the legal validity test.
Is notarization required for validity?
Not always. Notarization or recording may be needed depending on the asset and state law; if a closing requires notarization, consider in-person or permitted RON procedures to meet state rules.
How do you amend an Option Agreement?
Use a written amendment signed by the same authorized parties. Include effective date and reference the original agreement; record the amendment with the same care as the original execution.
How can an option be revoked?
Revocation depends on contract terms; absent a unilateral revocation clause, mutual written agreement or exercise failure typically ends the option. Consult counsel when the agreement provides specific revocation mechanics.
What happens if a party lacks signing authority?
A signature by an unauthorized signer risks invalidation. Require a certificate of incumbency or corporate resolution to confirm authority before closing to prevent this defect.
How long should records be kept?
Retain executed agreements, audit trails, and closing files for statutory periods: at least three years for IRS purposes (IRC §6501(a)), six years for HIPAA where applicable (45 CFR §164.530(j)), and longer where state law or industry rules require it.

Explore Templates

Contractor Agreement Follow-Up Letter Regarding Service Feedback Untitled Document Notice of Limitation of Time for Rejection of Additional Terms Consent to Conduct Background Investigation Conditional Agreement

be ready to get more

Join over 28 million airSlate SignNow users

Sign Now