Can an option be signed electronically?

Yes. Electronic signatures are legally recognized under the ESIGN Act (15 U.S.C. ch. 96) and UETA in most states. Confirm there are no statutory exceptions in the applicable jurisdiction and preserve an audit trail showing consent, intent, attribution, and retention.

Is notarization required for the option or deed?

Notarization is typically required for deeds at recording; the option contract itself often does not require notarization unless state law or local recording practice demands it. For deeds, confirm state notary and witness rules before recording.

What happens if the buyer misses the exercise deadline?

If the buyer fails to timely exercise according to the contract’s notice and deadline provisions, the option ordinarily expires and the seller retains the option consideration unless the contract provides relief or equitable remedy.

Can the option fee be enforced as liquidated damages?

Parties may specify remedies for breach, including forfeiture of an option fee; enforceability depends on the clause wording and state contract law. Avoid labels like 'liquidated damages' unless amount reasonably approximates likely harm.

How should exercise notice be delivered?

Specify permitted methods (email with read receipt, certified mail, overnight courier, hand delivery) and exact recipient address or email. Requiring return receipt or delivery confirmation reduces disputes over receipt timing.

Are remote online notarizations (RON) acceptable?

RON is permitted in most states but requirements vary. If a notary acknowledgment or self-proving affidavit is needed, confirm the state’s RON rules and retention requirements for audio-video recordings before relying on remote notarization.

Electronic Signature
Templates
Other
Option to Purchase Real Estate

Option to Purchase Real Estate

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

What an Option to Purchase Real Estate Is and how it works

An Option to Purchase Real Estate is a contract that gives a potential buyer (the optionee) the exclusive right, for a defined period, to buy specified real property from the owner (the optionor) at agreed terms. The option typically identifies the property, exercise price, option period, consideration (option fee), closing procedures, and any conditions precedent. While the option itself does not transfer title, exercising it triggers an obligation to proceed to closing under the contract terms if all requirements are met within the option window.

Why parties use an Option to Purchase Real Estate

An option secures exclusive purchase rights without immediate conveyance, allowing buyers time for due diligence and financing while giving sellers nonrefundable consideration and a committed potential sale window.

Which professionals and parties commonly use this document

Use depends on transaction complexity, local recording practice, and whether the parties prefer an enforceable short-term commitment versus immediate sale documentation.

Real estate investors seeking time for financing or entitlements before committing to purchase.
Property owners wanting nonrefundable option consideration and a defined marketing or sale window.
Brokers or attorneys preparing transaction documents and managing exercise deadlines for clients.

Core elements to include in a professional option form

A complete Option to Purchase Real Estate should be precise, unambiguous, and allocate responsibility for inspections, title review, financing, escrow, and closing to avoid downstream disputes.

Property Description

A legal description or recorded parcel number plus street address to uniquely identify the real property and avoid ambiguity at recording.

Option Term

Exact start and end dates and times for the option period, plus methods for delivering exercise notice and the effect of late delivery.

Exercise Price

The fixed purchase price or formula for determining price on exercise; state whether credits, prorations, or adjustments apply at closing.

Consideration

Amount and nature of option fee, whether refundable or nonrefundable, and how it is applied to the purchase price upon exercise.

Closing Mechanics

Specify escrow agent or closing attorney, closing date timeline after exercise, required deliverables, and allocation of closing costs.

Conditions & Remedies

Inspection and financing contingencies, default remedies, seller representations, and whether specific performance is available for the buyer.

Step-by-step: completing and executing an Option to Purchase Real Estate

Follow these steps to prepare, review, and execute an enforceable option while preserving recording and closing efficiency.

01

Draft the Option: Prepare clear property description, price, term, and contingencies.
02

Confirm Parties: Verify legal names and authority to sign for entities.
03

Secure Consideration: Collect and document option fee; record payment method and receipt.
04

Execute and Deliver: Obtain signatures, notarize if required, and deliver copies to all parties.

How an option triggers a purchase: simplified workflow

This high-level flow shows how the option moves from grant to closing when properly exercised.

Grant: Owner grants option and accepts consideration; option period begins.
Due Diligence: Optionee completes inspections, title review, and financing steps.
Exercise: Buyer delivers written exercise notice according to contract terms.
Closing: Escrow opens, title is cleared, and deed is recorded upon funding.

Configuring a digital workflow for the option document

When using an eSignature platform, configure fields, signer order, and authentication to match the legal requirements and transaction flow.

Field	Configuration
Signature Block	Require signature, printed name, and date for each party.
Initials	Add initial fields on each page if the contract requires page-by-page acknowledgment.
Attachments	Enable required attachments such as proof of funds or financing commitment.
Notifications	Set email reminders and receipt notifications for all signers.

Digital signing and delivery: technical considerations

Ensure the chosen provider supports any required notarization workflow, long-term storage, and the ability to download a complete certificate of completion for the record.

File formats: Accepts PDF and DOCX for upload and final signed output.
Authentication: Supports email, SMS codes, and stronger signer authentication when needed.
Audit trail: Captures timestamps, IP addresses, and signer actions.

Essential data and security fields to protect

Party Identifiers: Use full legal names

Property ID: Recorded legal description

Effective Date: MM/DD/YYYY format

Exercise Notice: Designated delivery method

Payment Records: Document option fee receipt

Audit Trail: Preserve signer IP and timestamps

Key risks and legal consequences to watch for

Missed Deadline: Option expires

Name Mismatch: Title defects

Insufficient Consideration: Enforceability dispute

Improper Notice: Exercise rejected

Uncleared Title: Closing delayed

Invalid Signature: Execution challenged

Common drafting and execution mistakes

Vague property descriptions that rely only on street address often create title examiner exceptions and delay recording or closing.
Failing to state whether the option fee is refundable or credited at closing leads to disputes over forfeiture and remedies.
Not specifying exact delivery methods and receipt requirements for exercise notices causes ambiguity and late-exercise disagreements.
Omitting clear allocation of closing costs or contingencies for financing increases the risk of contested obligations at closing.

Real-world examples of how options are used

These short examples show typical use cases from industry practitioners and how an option resolved practical transactional needs.

Investor Option Example

A regional developer secured an option to purchase a parcel while entitlements were obtained.

Optionee used the period to obtain zoning approvals.
At exercise the developer applied the nonrefundable option fee to the purchase price and closed within the contracted timeline, avoiding competing bids and preserving capital until approvals were secured.

Broker-Seller Example

A landlord granted a multi-month option to a single tenant-buyer to lock price and occupancy.

Seller received nonrefundable consideration.
The tenant completed inspections and financing during the option term, exercised on time, and the parties closed with the original terms, streamlining transition from lease to ownership.

Practical tips for accurate, enforceable options

Adopt clear language, confirm signatory authority, and align exercise mechanics with local recording and closing practices.

Be precise with property ID

Use the recorded legal description or assessor parcel number and attach deed references to prevent ambiguity at title review.

Spell out exercise procedure

Define exact notice format, delivery addresses/emails, and acceptable proof of receipt to avoid contested exercises.

Address title issues up front

Allocate responsibility for curing title exceptions and require delivery of marketable title at closing to limit surprises.

Document consideration clearly

State whether the option fee is nonrefundable, credited to price, or refundable in specific contingencies to avoid disputes.

Typical timelines and deadlines to set in the option

Specify firm dates and timeframes in the contract and tie performance milestones to those dates to preserve enforceability and clarity.

Option Period:

Defined start and end dates; include time of day and time zone when required.

Exercise Notice Deadline:

State exact deadline and accepted delivery methods for exercise notice.

Closing Date:

Fix number of days after exercise when closing must occur (e.g., 30–60 days).

Recording Timeline:

Specify responsibility and timeframe to record deed following closing, typically within 30 days.

Escrow Deposits:

State due date for earnest or closing funds and consequences for late payment.

eSignature pricing comparison relevant to Option to Purchase Real Estate workflows

Common eSignature plans vary by price, bulk-send features, audit trail depth, and HIPAA support. The table compares signNow with several market alternatives.

	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	No	No	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
Envelope Cap	No envelope cap	100 envelopes/user/year	Varies by plan	Varies by plan	Varies by plan

Frequently asked questions about Option to Purchase Real Estate

Answers below address common legal, procedural, and technical questions encountered when preparing or executing an option.

Need help? Contact support

Can an option be signed electronically?
Yes. Electronic signatures are legally recognized under the ESIGN Act (15 U.S.C. ch. 96) and UETA in most states. Confirm there are no statutory exceptions in the applicable jurisdiction and preserve an audit trail showing consent, intent, attribution, and retention.
Is notarization required for the option or deed?
Notarization is typically required for deeds at recording; the option contract itself often does not require notarization unless state law or local recording practice demands it. For deeds, confirm state notary and witness rules before recording.
What happens if the buyer misses the exercise deadline?
If the buyer fails to timely exercise according to the contract’s notice and deadline provisions, the option ordinarily expires and the seller retains the option consideration unless the contract provides relief or equitable remedy.
Can the option fee be enforced as liquidated damages?
Parties may specify remedies for breach, including forfeiture of an option fee; enforceability depends on the clause wording and state contract law. Avoid labels like 'liquidated damages' unless amount reasonably approximates likely harm.
How should exercise notice be delivered?
Specify permitted methods (email with read receipt, certified mail, overnight courier, hand delivery) and exact recipient address or email. Requiring return receipt or delivery confirmation reduces disputes over receipt timing.
Are remote online notarizations (RON) acceptable?
RON is permitted in most states but requirements vary. If a notary acknowledgment or self-proving affidavit is needed, confirm the state’s RON rules and retention requirements for audio-video recordings before relying on remote notarization.

Explore Templates

Writ Execution Form West Virginia Limited Liability Company West Virginia Will Instructions Agreement or Contract for Deed for Sale and Purchase of Real Estate Wyoming Deed Wyoming Claims Form

be ready to get more

Join over 28 million airSlate SignNow users

Sign Now