Can a Purchase Option be signed electronically?

Yes. Electronic signatures are legally binding under the ESIGN Act (15 U.S.C. ch. 96, 2000) and UETA in most jurisdictions provided intent, consent, attribution, and retention requirements are met.

Is notarization required to enforce an option?

Notarization is not universally required to form an agreement, but notarized acknowledgements or recorded memoranda are often used to protect priority and comply with county recording office requirements.

Should the option be recorded?

Recording a memorandum can preserve priority against subsequent purchasers or liens; recording requirements and effects vary by state and county practice.

What happens if the buyer misses the exercise deadline?

Failure to timely exercise generally results in forfeiture of the option unless the agreement provides cure rights or equitable relief; remedies depend on contract language and applicable state law.

Can the agreement be amended after signing?

Yes, parties can amend by written agreement; amendments should be signed with the same formalities as the original, and recorded if the original was recorded to preserve priority.

Who should review the document before signing?

Have title counsel, transactional counsel, and any impacted lenders review the agreement to confirm title clearance, recording strategy, and consent or subordination needs.

Electronic Signature
Templates
Miscellaneous
Purchase Option Agreement

Purchase Option Agreement

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Purchase Option Agreement

This Purchase Option Agreement (the "Agreement") is made effective as of by and between (the "Optionor"), and (the "Optionee").

RECITALS

WHEREAS, Optionor is the lawful owner of the asset described as: (the "Property"); and

WHEREAS, Optionee desires the exclusive right, but not the obligation, to purchase the Property upon the terms and conditions set forth herein; and

WHEREAS, Optionor is willing to grant such an option to Optionee in consideration of the option fee and mutual covenants herein.

OPTION GRANT

1. Grant. Subject to the terms of this Agreement, Optionor grants to Optionee an exclusive, transferable or non-transferable (selectable by contract) option to purchase the Property (the "Option") during the Option Period set forth below. The Option confers the right to purchase the Property on the Purchase Terms specified in this Agreement.

SCOPE OF WORK

Scope of Work / Inspections / Improvements

EXERCISE OF OPTION

2. Exercise Procedure. To exercise the Option, Optionee must deliver to Optionor a written notice of exercise (the "Notice of Exercise") at Optionor's notice address and tender all amounts required by the Payment Terms within days following delivery of the Notice of Exercise. Notice shall be delivered to:

Optionor Notice Address

PAYMENT TERMS

Purchase Price Option Fee (consideration for Option)

Credit Toward Purchase: Option fee shall be credited toward the Purchase Price at Closing if Optionee timely exercises the Option.

Payment Schedule and Closing Late Payment

Late fee for any monetary obligations not paid when due shall be % per month or the maximum allowed by law, whichever is less. In addition, Optionor may charge a minimum late fee of .

TERM AND TERMINATION

3. Option Period. The Option shall commence on and shall expire on (the "Option Period"), unless earlier terminated in accordance with this Agreement.

4. Termination. Either party may terminate this Agreement for material breach by the other party if such breach is not cured within days after written notice. Upon termination, Optionee shall have no further rights under this Agreement and all unpaid obligations shall remain due to the extent permitted by law.

CONFIDENTIALITY

5. Confidentiality. Each party (a "Receiving Party") shall hold in confidence and not disclose to any third party any non-public information disclosed by the other party (the "Disclosing Party") in connection with this Agreement, including financial information, inspection reports, proposals, and any material terms (collectively, "Confidential Information"), except to the extent necessary to exercise its rights or perform its obligations under this Agreement or as required by law. The Receiving Party shall protect Confidential Information with at least the same degree of care it uses to protect its own confidential information, but no less than a reasonable standard of care.

6. Exceptions. Confidential Information does not include information that: (a) is or becomes publicly available through no fault of the Receiving Party; (b) is rightfully received from a third party without restriction; or (c) was independently developed without use of the Disclosing Party's Confidential Information. If disclosure is compelled by law, the Receiving Party shall, where legal and practicable, provide prompt written notice to the Disclosing Party to allow it to seek protective relief.

REPRESENTATIONS, WARRANTIES AND COVENANTS

7. Authority and Title. Each party represents and warrants that it has the full right, power and authority to enter into and perform this Agreement and that the execution and performance of this Agreement will not violate any agreement to which it is a party.

8. Condition of Property. Optionor warrants that, to Optionor's knowledge, there are no undisclosed material liens or encumbrances other than those disclosed in writing to Optionee prior to the Effective Date. Optionee shall rely on its own inspections and due diligence.

DEFAULT AND REMEDIES

9. Remedies. In the event of an uncured material breach by either party, the non-breaching party may pursue any remedy available at law or in equity, including injunctive relief, specific performance, or damages. If Optionee timely exercises the Option and Optionor refuses to convey in accordance with this Agreement, Optionee shall be entitled to specific performance in addition to any other remedies.

GOVERNING LAW

Governing Law State

10. Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the state specified above without regard to conflict of laws principles.

ENTIRE AGREEMENT

11. Entire Agreement. This Agreement, including all exhibits and attachments referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and negotiations, whether oral or written. Any amendment or modification of this Agreement must be in writing signed by both parties.

MISCELLANEOUS

12. Assignment. Optionee may not assign the Option or any rights under this Agreement without Optionor's prior written consent, except that Optionee may assign to an affiliate or to a purchaser of substantially all of Optionee's assets if such assignee assumes Optionee's obligations in writing.

13. Notices. All notices under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by nationally recognized overnight courier, or three business days after deposit in the U.S. mail, postage prepaid, to the addresses set forth below or to such other address as a party may designate by notice.

Optionee Notice Address

Optionor (Print Name):

By:

Date:

Optionee (Print Name):

By:

Date:

What a Purchase Option Agreement Is and When It Applies

A Purchase Option Agreement is a contract granting a prospective buyer the right, but not the obligation, to buy property or equipment from a seller at a specified price within a defined period. The document typically sets the exercise price, option term, notice and exercise procedures, consideration paid for the option, and any conditions precedent. Purchase options are common in commercial real estate, lease-to-own arrangements, and equipment leases; they create contractual rights that must be clearly drafted and recorded, when applicable, to protect both parties and third-party interests.

Why a Clear Purchase Option Agreement Matters

A well-crafted Purchase Option Agreement reduces ambiguity about price, timing, and processes for exercising the option. It preserves enforceable rights, minimizes litigation risk, coordinates recording and title issues, and clarifies remedies if a party fails to perform. Clear notice and exercise procedures protect both buyer and seller by defining expectations and avoiding inadvertent forfeiture.

Who Drafts and Signs Purchase Option Agreements

Parties should involve counsel and title professionals when drafting or recording options to ensure enforceability and to protect lien and priority concerns.

Real estate developers and investors negotiating delayed closings or contingent purchases.
Commercial tenants or lessees securing future purchase rights for leased property or equipment.
Lenders and title companies reviewing for encumbrances, recording, and priority issues.

Typical Signatories and Their Roles

Seller

The owner or authorized representative offering the option; must have capacity to transfer title and must disclose material liens or encumbrances that affect the option or closing.

Optionee

The prospective buyer who pays consideration for the option; responsible for timely exercise, providing notice per the agreement, and meeting any financing or inspection conditions before closing.

Core Elements Every Professional Purchase Option Needs

A complete Purchase Option Agreement sets price mechanics, timeframes, notice rules, obligations at closing, recording instructions, and remedies for breach or failure to exercise.

Option Price

Specify the fixed price or formula for calculating the purchase price and whether credits or earnest money apply toward closing.

Option Term

Define the start and end dates and any renewal mechanics, including automatic renewals, extensions, or early termination conditions.

Exercise Procedure

Describe how to give notice (written, email, or recorded instrument), required delivery address, and required supporting documents.

Consideration

State the amount and treatment of option fee or deposit, whether refundable, and how it will apply at closing if exercised.

Title & Recording

Allocate responsibility for clearing title, paying recording fees, and delivering marketable title at closing.

Remedies & Defaults

Detail remedies for failure to exercise or close, including forfeiture, damages, specific performance, or injunctive relief.

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

Follow these steps in order to prepare, execute, and, if necessary, record a Purchase Option Agreement correctly.

01

Draft Terms: Negotiate price, term, and exercise procedures.
02

Verify Title: Order title report and resolve encumbrances.
03

Sign and Notarize: All signatories execute; obtain notary if required.
04

Record if Needed: Record the option or memorandum where priority is needed.

How to Configure an Online Option Agreement Workflow

Set up the digital workflow to match your signing sequence, authentication level, and storage requirements before sending to signers.

Field	Configuration
Signature Type	Email link, SMS code, or RON authentication
Signer Order	Sequential signing or simultaneous signer permissions
Authentication Level	Email-only, SMS OTP, or knowledge-based verification
Retention Settings	Automatic storage, audit trail enabled, access controls

Digital Signing and eSubmission Requirements

Verify the platform meets legal standards for ESIGN/UETA compliance, preserves tamper-evident audit trails, and supports required integrations and retention controls.

Authentication Options: Email, SMS, KBA, RON
Document Formats: PDF, DOCX, HTML
Integrations: CRM, cloud storage, API

Where to File or Send the Executed Agreement

The destination for an executed Purchase Option Agreement depends on its purpose: recording, internal records, or delivery to third parties such as title companies or lenders.

Recording Office: County recorder for a memorandum or lien notice
Title Company: Deliver for clearance and closing coordination
Lender: Provide copies if financing is involved
Internal Legal File: Store signed PDF with audit trail

Typical Deadlines and Timeframes to Track

Track option periods and any required notice windows carefully; missed deadlines can forfeit rights or trigger defaults.

Option Exercise Deadline:

Date by which buyer must give timely written notice

Notice Periods:

Days required to deliver exercise notice and cure defaults

Recording Window:

Record memorandum promptly to preserve priority

Inspection Periods:

Time allowed for inspections and remedy requests

Closing Date:

Date by which parties must complete the purchase closing

Common Preparation and Drafting Errors to Avoid

Unclear exercise instructions that fail to specify notice method, address, or required supporting documents, producing disputes over whether exercise was timely.
Using informal property descriptions rather than the legal description from the deed, which can cause recording rejection or title ambiguity.
Failing to allocate who pays for title clearance, recording fees, transfer taxes, or escrow costs, causing unexpected closing disputes.
Not coordinating the option with existing financing or lease provisions, which can create priority conflicts or lender consent issues.

Consequences of an Incorrect or Incomplete Agreement

Unenforceable Option: Buyer may lose purchase rights

Recording Rejection: Priority or notice protections lost

Title Clouding: Owner or buyer faces title defects

Contract Disputes: Increased litigation and costs

Financing Delays: Closing timelines extended

Potential Damages: Monetary liability or forfeiture

Essential Information to Include in the Agreement

Seller Name: Full legal entity name

Buyer Name: Full legal entity name

Property Details: Legal description and parcel ID

Option Consideration: Exact dollar amount

Exercise Terms: Deadline and notice method

Signatures: Executed and dated by parties

eSignature Vendor Pricing Snapshot for Signing Purchase Options

Compare basic pricing and feature availability across common eSignature vendors. signNow appears first per platform 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 plan	Varies by plan	Varies by plan	Varies by plan
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

Real-World Examples of Purchase Option Use

These examples illustrate how option agreements are used in practice and the outcomes parties achieve when documents are clear and executed properly.

Martin Properties — Lease-to-Own

A small property manager used an option to convert leases into sales when market timing improved.

The option specified exercise notice and crediting of deposits.
As a result, the manager closed several sales without in-person signings and preserved market price terms for buyers.

Optica Ventures — Development Option

An investor secured an option on a development parcel while seeking entitlements and financing.

The agreement required recording a memorandum.
That step protected the investor’s priority during permitting, enabling a later acquisition once financing was arranged.

Frequently Asked Questions About Purchase Option Agreements

Answers to common questions about enforceability, electronic signing, recording, and modification of Purchase Option Agreements.

Need help? Contact support

Can a Purchase Option be signed electronically?
Yes. Electronic signatures are legally binding under the ESIGN Act (15 U.S.C. ch. 96, 2000) and UETA in most jurisdictions provided intent, consent, attribution, and retention requirements are met.
Is notarization required to enforce an option?
Notarization is not universally required to form an agreement, but notarized acknowledgements or recorded memoranda are often used to protect priority and comply with county recording office requirements.
Should the option be recorded?
Recording a memorandum can preserve priority against subsequent purchasers or liens; recording requirements and effects vary by state and county practice.
What happens if the buyer misses the exercise deadline?
Failure to timely exercise generally results in forfeiture of the option unless the agreement provides cure rights or equitable relief; remedies depend on contract language and applicable state law.
Can the agreement be amended after signing?
Yes, parties can amend by written agreement; amendments should be signed with the same formalities as the original, and recorded if the original was recorded to preserve priority.
Who should review the document before signing?
Have title counsel, transactional counsel, and any impacted lenders review the agreement to confirm title clearance, recording strategy, and consent or subordination needs.

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