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Option to Purchase Agreement

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OPTION AGREEMENT FOR THE SALE AND PURCHASE OF REAL ESTATE
COMMERCIAL BUILDING

WARNING: THIS CONTRACT HAS SUBSTANTIAL LEGAL CONSEQUENCES AND THE PARTIES ARE ADVISED TO CONSULT LEGAL AND TAX COUNSEL.

This Option Agreement is made on this the day of , 20 , by and between , hereinafter referred to as the "SELLER", whether one or more, and , hereinafter referred to as the "PURCHASER", whether one or more.

FOR AND IN CONSIDERATION of $10.00 and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows:

1. GRANT OF OPTION: The Seller does hereby grant unto the Purchaser the exclusive and irrevocable option to purchase, upon the terms and conditions hereinafter set forth, Seller's property situated in County, , together with all improvements located thereon, described as follows:

SEE ATTACHED EXHIBIT "A" FOR DESCRIPTION

All contents of the commercial building, including but not limited to fixtures, personal property, equipment, supplies, machines, and other contents, are improvements included in the sale to Purchaser except the following items to be retained by Seller:

Seller represents that the property is zoned zoned not zoned, and that the property may be used for the intended use of Purchaser which is:

Seller further represents that the building is in compliance with all applicable ordinances and regulations of the governing body where the property is located except the following:

Seller has not received notice of any violations of building codes or other ordinances or regulations within the past years.

2. EXERCISE OF OPTION: This option to purchase may be exercised by the Purchaser at any time prior to midnight on by notice in writing to the Seller addressed to the following address:

3. DEFAULT BY PURCHASER: In the event of the failure of the Purchaser to exercise this option, or in the event of any default by the Purchaser after the exercise of this option, all money paid by the Purchaser to the Seller upon the execution of this Agreement, or upon any extension, shall be retained by the Seller as consideration for the granting of this Option to the Purchaser, and all rights of the Purchaser under this Agreement shall terminate.

4. TITLE: Within fifteen (15) days after the Purchaser has exercised this Option as hereinabove provided, the Seller shall deliver to the Purchaser, or to Purchaser's attorney, a Certificate of Title, title report or title abstract by a reputable attorney, title company or abstract company, upon which title report insurance can be obtained, covering the property described in paragraph I above which shall reflect that marketable fee simple title to the subject property is vested in Seller and that same is insurable by a title company of Purchaser's choice. Said Certificate shall be subject only to taxes for the current year, easements, and rights of way of record, and prior mineral reservations. Should said Certificate reflect any other exceptions to the title unacceptable to Purchaser, Purchaser shall notify the Seller in writing of any defects within fifteen (15) days (the title review period) and the Seller shall have a reasonable time (but not more than 25 days) in which to make the title good and marketable or insurable, and shall use due diligence in an effort to do so.

5. PURCHASE PRICE: The purchase price for the property shall be ($ ). The purchase price after the application of the option money shall be paid by Purchaser to Seller in cash. Closing shall take place within fifteen (15) days of Seller's delivery to Purchaser of an acceptable Title Certificate as provided for in Paragraph 4.

6. OPTION MONEY: Upon execution of this Option, Purchaser has paid unto Seller the sum of ($ ) as "Option Money". In the event that Purchaser exercises the option to purchase this property within the initial option period or any extension thereof and is not in default in any other terms of this Agreement, said Option Money shall not apply toward the purchase price at closing.

7. EXTENSION: Purchaser shall be entitled to extend the time within which this Option may be exercised to midnight , 20 , by paying unto Seller in cash an additional sum of $ prior to the expiration of the initial option period and by giving notice in writing to Seller of Purchaser's election to extend the option. Upon closing of the sale within the extended option period, said sum shall apply toward the purchase price.

8. EXPENSES OF SALE: In the event that Purchaser exercises this option to purchase the subject property, the following closing costs shall be paid as provided. (Leave blank if the closing cost does not apply.)

Closing Costs Purchaser Seller Both*
Attorney Fees
Title Insurance
Title Abstract or Certificate
Property Insurance
Recording Fees
Appraisal
Survey
All other closing costs

* 50/50 between Purchaser and seller.

9. POSSESSION: Purchaser shall be entitled to possession of the property at closing.

10. RIGHT OF ENTRY: During the term of this Option or any extension hereof, Purchaser shall be entitled to enter upon the property for the purpose of conducting soil tests, engineering studies, surveys and any other desired inspections of the property.

11. TAXES: Taxes shall be prorated as of the date of closing.

12. DEFAULT: This contract shall be binding upon and inure to the benefit of the heirs, administrators and assigns of the parties hereto and upon default in any of the terms of this Agreement the defaulting party agrees to pay all costs of Court and a reasonable attorney's fee.

13. ATTORNEY'S FEES: The prevailing party in any legal proceeding brought under or with respect to the transaction described in this contract is entitled to recover from the non-prevailing party all costs of such proceeding and reasonable attorney's fees.

14. REPRESENTATIONS: Seller represents that as of the Closing Date (a) there will be no liens, assessments, or security interests against the Property which will not be satisfied out of the sales proceeds unless securing payment of any loans assumed by Purchaser and (b) assumed loans will not be in default. If any representation in this contract is untrue on the Closing Date, this contract may be terminated by Purchaser and the earnest money will be refunded to Purchaser. All representations contained in this contract will survive closing.

15. AGREEMENT OF PARTIES: This contract contains the entire agreement of the parties and cannot be changed except by their written agreement.

16. NOTICES: All notices from one party to the other must be in writing and are effective when mailed to, hand-delivered at, or transmitted by facsimile machine as follows:

To Purchaser at:

Telephone

Facsimile

To Seller at:

Telephone

Facsimile

17. ASSIGNMENT: This agreement may may not be assigned by Purchaser without the consent of Seller. This agreement may be assigned by Seller and shall be binding on the heirs and assigns of the parties hereto.

18. PRIOR AGREEMENTS: This contract incorporates all prior agreements between the parties, contains the entire and final agreement of the parties, and cannot be changed except by their written consent. Neither party has relied upon any statement or representation made by the other party or any sales representative bringing the parties together. Neither party shall be bound by any terms, conditions, oral statements, warranties, or representations not herein contained. Each party acknowledges that he has read and understands this contract. The provisions of this contract shall apply to and bind the heirs, executors, administrators, successors and assigns of the respective parties hereto. When herein used, the singular includes the plural and the masculine includes the feminine as the context may require.

19. NO BROKER OR AGENTS: The parties represent that neither party has employed the services of a real estate broker or agent in connection with the property, or that if such agents have been employed, that the party employing said agent shall pay any and all expenses outside the closing of this agreement.

20. EMINENT DOMAIN: If the property is condemned by eminent domain after the effective date hereof, the Seller and Purchaser shall agree to continue the closing, or a portion thereof, or cancel this Contract. If the parties cannot agree, this contract shall remain valid with Purchaser being entitled to any condemnation proceeds at or after closing, or be cancelled and the earnest money returned to Purchaser.

21. RECORDING: This agreement may may not be recorded in the official records of County, .

22. OTHER PROVISIONS

23. GOVERNING LAW: This contract shall be governed by the laws of the State of .

IN WITNESS WHEREOF, the parties have executed this Agreement on this the day of , 20 .

Seller

Seller

Purchaser

Purchaser

STATE OF

COUNTY OF

PERSONALLY appeared before me, the undersigned authority, the within named, , who acknowledged, signed, executed and delivered the above and foregoing agreement.

DATED this the day of , 20.

NOTARY PUBLIC

My Commission Expires:

STATE OF

COUNTY OF

PERSONALLY appeared before me, the undersigned authority, the within named, , who acknowledged, signed, executed and delivered the above and foregoing agreement.

DATED this the day of , 20.

NOTARY PUBLIC

My Commission Expires:

EXHIBIT “A”

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What the Option to Purchase Agreement Is and How It Works

An Option to Purchase Agreement is a legally binding contract that gives a prospective buyer the exclusive right, for a defined period, to purchase real property at a predetermined price or on agreed terms. The buyer typically pays an option fee in exchange for that exclusivity while performing due diligence, securing financing, or deciding whether to exercise the purchase right. If the buyer exercises the option within the option period, the parties proceed to closing under the agreed terms; if not, the seller usually retains the option fee and is free to market the property. The agreement can be used for residential, commercial, or land transactions.

Why Parties Use an Option to Purchase Agreement

An option secures exclusive purchase rights without creating a full purchase obligation, preserves a negotiated price, and provides time for inspections, title review, and financing. Sellers receive option consideration up front, and buyers gain priority to buy if conditions are met.

Why Parties Use an Option to Purchase Agreement

Who Typically Uses an Option to Purchase Agreement

Several parties commonly prepare or sign these agreements depending on the transaction structure and goals.

  • Prospective buyers seeking time to inspect, finance, or resell while locking a price.
  • Sellers or property owners who want nonbinding commitment plus immediate option consideration.
  • Real estate brokers, investors, and attorneys facilitating deal terms, filings, and closing logistics.

Knowing the primary users helps assign responsibilities for drafting, review, and execution.

Core Elements to Include in a Professional Option to Purchase Agreement

A complete agreement clearly sets the parties, property, option fee, exercise mechanics, deadlines, and remedies. Each component should be explicit to avoid later disputes and to support enforceability under state contract law.

Parties

Identify buyer(s) and seller(s) by full legal name and business form; include authorized signer names and capacity to bind the entity.

Property

Use the full legal description or recorded parcel number and street address; a vague description can void the exercise of the option.

Option Fee

State the exact option consideration amount, payment method, and whether it is refundable or credited at closing.

Exercise Terms

Define how to exercise (written notice, delivery method), the deadline, and any conditions precedent to exercise.

Closing Logistics

Specify the proposed closing date, responsibilities for title, prorations, and who pays closing costs or transfer taxes.

Remedies

Explain consequences for breach, including forfeiture of the option fee, specific performance availability, or termination rights.

Step-by-Step: How to Complete and Execute the Agreement

Use this sequential checklist to prepare, sign, and preserve a valid option agreement.

  • 01
    Draft Terms: Negotiate price, option fee, period, and exercise mechanics clearly.
  • 02
    Include Property Details: Insert full legal description and any relevant exhibits or plats.
  • 03
    Sign and Deliver: Obtain signatures and deliver the option fee per the agreement.
  • 04
    Record or Archive: Record only if required; otherwise retain executed copies and proof of payment.

Configuring an Online Workflow for This Agreement

Set up online fields, authentication, and routing to match legal and operational requirements before sending for signature.

Field Configuration
Notification Email and optional SMS reminders to signers
Authentication Email link or SMS code; use stronger ID proofing for high-value deals
Signer Order Sequential or parallel signing based on negotiation
Retention Store final PDF/A with audit trail for compliance

How Electronic Completion and Delivery Typically Operate

Digital workflows follow a consistent sequence from upload through signature capture and storage; ensure each step enforces the chosen authentication level.

  • Upload Document: Add the agreement file to the eSignature platform
  • Place Fields: Add signature, date, and conditional fields as needed
  • Send to Signers: Send by email link or bulk send for multiple recipients
  • Capture Audit Trail: System logs IP, timestamps, and actions automatically

Delivery Options and Platform Considerations for eSigning

Choose a platform that supports required authentication, document formats, and retention policies for your jurisdiction.

  • Integrations: Salesforce, NetSuite, Microsoft 365, Google Workspace
  • Supported Formats: PDF, DOCX, HTML, Excel
  • Authentication: Email, SMS, KBA, SSO options

Comparison: signNow and Common eSignature Vendors for This Document

Basic pricing and feature distinctions across vendors help select an eSignature provider that meets authentication, HIPAA, and volume needs for real estate option agreements.

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 Varies
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Key Dates to Track in an Option Agreement

Document explicit calendar deadlines and use reminders to avoid forfeiture or unintended expiration.

Option Effective Date:

The date the agreement goes into force (use MM/DD/YYYY format)

Option Expiration:

Final date to exercise the option; failure to notify by this date terminates the right

Exercise Notice Deadline:

Specify how notice must be delivered and the exact cutoff time and date

Scheduled Closing Date:

Date by which closing must occur after exercise, if exercised

Recording Deadline:

If recording is required, note county recording timelines and fees

Milestone Timeline from Option to Closing

A vertical milestone view helps track the sequence from grant to closing and the actions required at each stage.

01

Grant Option

Seller executes the agreement and buyer pays the option fee

02

Due Diligence

Buyer inspects, reviews title, and secures financing during the option period

03

Exercise Decision

Buyer delivers exercise notice per the agreement before expiration

04

Closing

Parties complete settlement and transfer title per closing instructions

Common Preparation and Drafting Mistakes to Avoid

  • Using an ambiguous property description that fails a title search and prevents clear transfer of ownership.
  • Leaving exercise mechanics unspecified, such as delivery method or recipient, which creates disputes if notice is sent incorrectly.
  • Failing to record or preserve proof of option fee payment, leaving the buyer unable to establish performance.
  • Overlooking local recording, transfer tax, or municipal approval requirements that can delay or block closing.

Security and Compliance Features to Consider for Electronic Execution

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
Audit Trail: Comprehensive IP, timestamp, and action logs
Regulatory Standards: ESIGN and UETA compliance
Healthcare: HIPAA compliant with BAA available
FDA/Pharma: 21 CFR Part 11 compliance available
Certifications: SOC 2 Type II and ISO 27001

Material Risks and Consequences of an Incorrect Agreement

Option Fee Forfeiture: Buyer may lose the fee
Loss of Exclusivity: Seller may resell the property
Unenforceable Exercise: Ambiguous notice may void exercise
Title Defects: Closing may be delayed or canceled
Recording Errors: Incorrect recording can affect priority
Statute Issues: Missed deadlines can bar relief

Real-World Examples of Online Execution and Management

These brief case sketches show how organizations use electronic workflows to handle real estate option documents.

Martin Properties

Tim Martin, Founder

  • We process and execute all documents online with full compliance.
  • Using digital workflows lets Martin Properties complete option agreements and move to closing faster while maintaining signed audit trails and mobile access for clients.

Optica Ventures LLC

Brian Fitzgibbons, COO

  • The interface is simple for our team and customers.
  • Optica uses online signatures to secure option fees, store executed copies centrally, and reduce time between offer and exercise by removing in-person steps.

Common Questions and Practical Answers

Questions about enforceability, signatures, and deadlines are frequent; these concise answers address typical concerns and cite governing legal frameworks where relevant.


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