Fill and Sign the Option to Purchase Propertyfree Legal Forms

Page 1 of 5 OPTION AND CONTRACT OF SALE AGREEMENT(To Purchase Land) State: County: Seller: (Name and Address) Buyer: (Name and Address) For the consideration provided for in this Option and Contract of Sale Agreement (the “Agreement”), on and subject to the terms and conditions of this Agreement, Seller, na med above, grants to Buyer, named above, the exclusive and irrevocable option to purchase the interest in lands in _____County, Texas, (the “Lands”) described below. Seller and Buyer ma y be referred to collectively in this Agreement as the “Parties,” or individually as a “Party.” For valuable consideration Seller and Buyer agree as follows: 1. Description of Lands. The Lands that are the subject of this Agreement are _____ acres, more or less (the “Lands”), described as follows: (Description of Lands) 2. Rights in Land Subject to this Agreement. ( Describe the storage rights or subsurface depths to be acquired, to be referred to as the “Described Rights.”) 3. Option Granted. For the consideration provided for in this Agreement, Seller grants to Buyer, subject to the further terms, conditions, and provisions of this Agreement, the exclusive and irrevocable option to purchase the Described Rights in the Lands (the “Option”). 4. Option Term. The Option shall be for a term of _____ years, beginning on the Effective Date as defined in Section 11. E. below. 5. Option Payments. Buyer will pay to Seller the sum of _____($_____) per annum, for the Option granted by this Agreement. The first payment shall be delivered to Selle r, or to Seller’s credit, on Seller’s execution of this Agreement, and thereafter, annually on eac h anniversary of the Effective Date during the Option Term. Buyer may, at its sole el ection, pay Seller in advance for any Option payments due Seller. Any advance payments will be de emed payments due for the time period they are intended to cover, and shall not accele rate Buyer’s obligation to make any Option payments before a payment is due. 6. Rights and Obligations During Option Term. Page 2 of 5 A. Buyer. During the Option Term, Buyer shall have the right to perform an investigation of the Lands to assess the possibility of making use of the Lands for the purposes for which Buyer intends to acquire the Lands. This investigation may, and is permitted to include, at the sole cost and expense of Buyer: 1. Conducting a survey of the Lands. 2. All tests, surveys and investigations Buyer deems necessary or advisable to evaluate the Lands and determine their suitability for Buyer’s purposes. If, during the Option Term, while Buyer is conducting its tests, surveys, and investigations, the Lands are disturbed in a manner giving rise to compensable damages or the need for restoration: As to any sums that may be due to parties other than Seller, Buyer shall pay any reasonable damages to the third parties for loss of livestock or crops. Buyer shall not be requi red to pay any surface Lessee for temporary interruptions of the use of parts of the Lands. As to any disturbance to the Lands which may require restoration, Buyer may postpone the restoration, so long as the matters to be restored do not otherwise interfere with the use of the Lands, or create a hazardous condition, until Buyer makes the determination to exerc ise the Option granted by this Agreement. On Buyer electing not to exercise the Option, Buyer will immediately commence all necessary restoration of the Lands. If Buyer elect s to exercise the Option, it may withhold restoration activities until after the close of the sale of the Described Rights in the Lands. B. Seller . 1. Seller shall provide Buyer and its representatives with reasonable access to the Lands for the performance of activities specified in A. above, and shall allow Buyer access to all of Seller’s abstracts and records pertaining to the Lands. 2. Seller shall not grant any easements, rights of ways, or surface leases on the Lands, or any renewals or extensions of existing easements, rights of way or surface leases, without the prior written consent of Buyer, which consent will not be unreasonably withheld. Seller acknowledges Buyer may withhold consent if the rights proposed to be granted by Seller would interfere with Buyer’s intended use of the Lands. 3. Seller shall not grant any oil and gas lease on the mineral estate on the La nds unless that Lease is subject to the terms of this Agreement and the limita tion on the mineral reservation of Seller to be included in the Deed to be delivered to Buyer on its exercise of the Option. 4. Seller shall not enter into any other contracts or agreements affecting the Lands during the Option Term. Page 3 of 5 7. Termination of Option. At any time during the Option Term Buyer may terminate this Option by delivering Seller a notice of termination at least thirty (30) days prior to the date Buyer elects to terminate the Option. In that event, Seller shall retain al l Option payments paid by Buyer, and Buyer shall have no further rights or obligations under this Agreement. 8. Buyers Exercise of Option to Purchase. At anytime during the Option Term, Buyer may exercise its Option to purchase the Described Rights in the Lands. A. Acreage to be included in the Sale to Buyer. The exact quantum of acreage to be included in the sale to Buyer shall be determined by the survey, provided for in Section 6.A.1. above, which will include the lands described in Section 1. above, estimated to consist of _____ acres, more or less. The description of the Lands determined by that survey shall be utilized for the purposes of describing the Lands in the Deed to be delivered to Buyer at closing, and the quantum of acreage determined by that survey shall be the quantum of acreage utilized in determining the purchase price. B. Purchase Price. On exercise of its Option, Buyer shall pay to Seller, and Seller agrees to accept from Buyer, as the Purchase Price for the Described Rights in the Lands, an amount equal to $_____/acre. All Option payments made by Buyer to Seller shall be applied to the Purchase Price to be paid to Seller. 9. Conveyance to Buyer and Reservations by Seller. On Buyer notifying Seller of its intent to exercise its Option to purchase the Described Rights in the Lands, at cl osing, Seller will deliver to Buyer a General Warranty Deed of the Described Rights in the Lands, free and clear of all liens, claims, and encumbrances, save for permitted encumbrances, identified bel ow, and subject to the reservations set out below. The Deed shall be on a form mutually agree d on by Seller and Buyer. The Deed shall include all of Seller’s rights, title, and intere sts in all abandoned wells and wellbores on the Lands. Permitted encumbrances are: easements and rights of way on, over, or under the Lands granted by Seller, or Seller’s predecessors in title, prior to the Effective Date of t his Agreement, and recorded in _____ County, Texas; liens for ad valorem taxes for the current year, which have accrued, but are not yet due; and, any agreements, in recordable form, which Seller ha s entered into subsequent to entering into this Agreement, consented to by Buyer. In the Warranty Deed to be delivered to Buyer at closing, Seller shall reserve al l minerals, owned by Seller, in the Lands. This mineral reservation shall provide that Sel ler waives the right to make use of the surface to a depth of _____ feet beneath the surface of the ground, for exploration, and production of oil, gas, and minerals on and beneath that portion of the Lands. Seller’s use of the surface of the remainder of the Land for oil and gas expl oration purposes under all of the Lands shall be subject to any rules and regulations imposed by all Page 4 of 5 governmental agencies having authority over those activities, and the activities Buyer will conduct on the Lands. 10. Closing. Within 30 days of Buyer notifying Seller of its election to exercise the Option provided for in this Agreement, the close of the Sale of the Described Rights in the L ands shall occur, at a time and place agreed on by Seller and Buyer. At Closing, Seller shal l deliver to Buyer the Warranty Deed provided for in this Agreement, containing terms consistent with the terms and provisions of this Agreement, and a complete description of the Lands, and Buyer shall deliver to Seller the agreed on Purchase Price. 11. Miscellaneous. A. Sellers Representations and Warranties. Seller represents and warrants to Buyer that: on the date this Agreement is signed, Seller owns marketable title t o the surface of the Lands; the Lands are not subject to any oil and gas leases; there are no claims or litigation pending which impair the right of Seller to sell the Described Rights in the Lands or otherwise adversely affect the Described Rights in the Lands; Seller has full right and authority to enter into the Agreement t o sell the Described Rights in the Lands, without the joinder or consent of any other person or persons; Seller has read and understands all the terms, conditions, and provisions of this Agreement; and, Seller is not under any limitation which would prevent the close of the transaction contemplated by this Agreement if and when Buyer elects to exercise its Option to purchase the Described Rights in the Lands. B. Proportionate Reduction. In the event it is determined that Seller owns less than one hundred percent (100%) of the surface estate in the Lands, this Agreement shall nevertheless be binding on Seller, but the Option Payments and Purchase Price to be paid to Seller shall be proportionately reduced to the interest in the surface estate Seller owns in the Lands. C. Successors and Assigns. This Agreement and all of its terms are and shall be binding on and inure to the benefit of Seller and Buyer and their respective heirs, successors, estates, personal representatives, and assigns, and shall be deemed covenants running with the Lands. Buyer may assign all or part of its rights and obligations under this Agreement without the consent of Seller. D. Proration of Taxes. If and when Buyer elects to exercise its Option to purchase the Described Rights in the Lands, at closing, ad valorem taxes on the Lands may be prorated between Seller and Buyer as of the first day of the month in which Closing occurs. If taxes have not yet been assessed for the year in which Closing occurs, that proration shall be based on the preceding year’s tax liability. E. Effective Date. This Agreement shall be deemed effective on the first day of the month and year when it is executed by Seller and Buyer, and that Effective Date shall be the beginning date of the Option Term. Page 5 of 5 F. Entire Agreement. This Agreement constitutes the entire Agreement between the parties with respect to the Option granted to Buyer and the sale of the Described Rights in the Lands by Seller to Buyer and supersedes all prior proposals, offers, understandings, and agreements with respect to the Lands. G. Address for Payments. All payments to be made to Seller shall be delivered to the address for Seller stated above, or to any other address as Seller may provide to Buyer. Any change of address will be binding on Buyer thirty (30) days after its receipt of the notice of a change of address. All payments shall be deemed timely made if personally delivered to Seller or deposited in the United State s mail, postage prepaid, addressed to Seller. H. Confidentiality. Seller acknowledges that by entering into this Agreement Seller has or may obtain proprietary and confidential information concerning Buyer’s plans for the Described Rights in the Lands, which if disclosed to any third party or parties, will result in significant harm to Buyer. For the consideration provided for in this Agreement, Seller agrees that Seller and Seller’s agents and representatives, shall not, without the prior written consent of Buyer, communicate, in any manner the terms of this Agreement and/or any other information Buyer has or will provide Seller during the term of this Agreement. This Agreement is executed by Seller and Buyer as of the date of acknowledgment of their respective signatures, but shall be deemed effective on the Effective Date provided for in Section 11.E. above. Seller Buyer (Acknowledgments)