Can an option contract be recorded?

Yes, an option contract can be recorded at the county recorder in many jurisdictions, but recording is optional and may reveal transaction terms publicly. Recording may be used to construct notice against third parties or to perfect interests; consult local recording rules before filing.

Are electronic signatures valid?

Electronic signatures are legally valid for most option contracts under the ESIGN Act (15 U.S.C. ch. 96) and UETA in UETA states; ensure intent, consent, attribution, and reproducible records to meet legal validity requirements.

Do I need a notary or witnesses?

Not all option contracts require notarization or witnesses to be enforceable, but deeds and certain conveyance documents typically require notary acknowledgement for recording. State law varies; use a notary when recording or when statutory formalities demand it.

How can the option be revoked or canceled?

Revocation typically follows the contract terms or mutual written agreement; unilateral revocation before exercise may breach the agreement and expose the revoking party to damages if exclusive rights were granted.

What happens if the option expires?

If the option lapses without exercise, the optionee generally loses exclusive purchase rights and the optionor retains the option fee if the contract states it is nonrefundable; remedy provisions depend on the contract language.

Who should retain the signed originals?

Each party, counsel, and escrow/title should retain a complete executed copy. Follow federal and industry retention rules (e.g., IRS, HIPAA) and keep an auditable electronic copy with the platform’s certificate of completion.

Electronic Signature
Templates
Real estate
Real Estate Option Contract

Real Estate Option Contract

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REAL ESTATE OPTION CONTRACT

Parties

Optionor (Owner/Seller) Optionor Contact Address Optionor Telephone Optionor Email Optionee (Prospective Buyer) Optionee Contact Address Optionee Telephone Optionee Email

Property Identification

Property Address Parcel / APN Number Legal Description

Grant of Option; Term

Optionor grants to Optionee the exclusive and irrevocable option to purchase the Property on the terms set forth in this contract (the "Option"). The Option shall commence on and shall expire at 5:00 p.m. local time on unless earlier terminated in accordance with this agreement.

Option Consideration and Payment

In consideration for the grant of the Option, Optionee shall pay to Optionor a non-refundable Option Fee in the amount of $ (the "Option Fee"). The Option Fee shall be paid on or before and shall be applied to the Purchase Price at closing if the Option is timely exercised in accordance with this agreement.

Purchase Price and Earnest Money

Purchase Price Earnest Money Deposit (if separate)

If the Option is exercised, Optionee shall deliver the earnest money described above to the designated escrow or closing agent within days after delivery of the Notice of Exercise. The Option Fee shall be credited toward the Purchase Price at closing.

Exercise Procedure; Notices

The Option may be exercised only by written Notice of Exercise delivered to Optionor at Optionor's notice address and to the escrow agent at the notice address set forth below. Notice of Exercise must be received by Optionor prior to the Option Expiration Date. Notice shall be given by personal delivery, nationally recognized overnight carrier, or certified mail, return receipt requested. Optionee's notice address is:

Optionee Notice Address Optionor Notice Address

Closing; Possession; Prorations

Closing shall occur on or before (the "Closing Date"), subject to satisfaction or waiver of all contingencies and delivery of merchantable title. Possession shall be delivered to Optionee on , subject to the terms agreed at closing. Real property taxes, utilities, rents and other customary items shall be prorated as of the Closing Date.

Inspections; Contingencies

Optionee shall have the right to inspect the Property and complete investigations during an inspection period of days following the effective date of this Option. Optionee may terminate this Option if, within the inspection period, Optionee notifies Optionor in writing of defects that are not cured or waived.

Title; Survey

At or before closing, Optionor shall provide a marketable title to the Property free of liens and encumbrances except those approved in writing by Optionee. Optionee may obtain, at Optionee's expense, a survey and review title exceptions. Optionor agrees to cure any title defect existing as of the Closing Date unless otherwise agreed in writing.

Representations and Warranties

Optionor represents that Optionor is the sole owner of the Property, has full authority to grant this Option, and that there are no pending actions, orders, or notices affecting the Property other than those disclosed in writing to Optionee. Optionee acknowledges that except for the express representations in this agreement, Optionor makes no other representations or warranties as to condition, fitness, habitability, or suitability of the Property.

Environmental and Property Disclosures

To the best of Optionor's knowledge, except as disclosed herein, there are no hazardous materials, underground storage tanks, or other environmental conditions affecting the Property. Optionor certifies the following disclosures:

Lead-based paint (if property constructed prior to 1978): Yes No

Known mold or water intrusion: Yes No

Prior material structural damage or repairs: Yes No

Default; Remedies

If Optionee fails to timely pay amounts required under this Option or otherwise defaults, Optionor may retain the Option Fee as liquidated damages in full settlement of Optionor's claims and the Option shall terminate. If Optionor breaches a material obligation under this Option, Optionee may seek specific performance, damages, or other remedies as permitted by law. The remedies set forth are cumulative and not exclusive.

Brokerage and Commissions

Broker or Agent (if any)

Any commission or fee payable to brokers shall be paid pursuant to a separate written agreement and shall not affect the validity of this Option. Each party represents they have disclosed any brokerage relationships and will indemnify the other for claims relating to undisclosed brokerage agreements.

Governing Law; Miscellaneous

This Option shall be governed by and construed in accordance with the laws of the State of . This agreement constitutes the entire agreement between the parties concerning the Option and supersedes all prior negotiations and agreements. Any amendment must be in writing and signed by both parties.

Notices

All notices required or permitted under this Option shall be in writing and shall be deemed delivered when personally delivered, delivered by overnight courier, or three (3) business days after being mailed by certified mail to the Parties' notice addresses set forth above or as later designated in writing.

Signatures

The parties acknowledge that they have read this Real Estate Option Contract, understand its terms, and agree to be bound by its provisions. Each person signing below represents that they are authorized to execute this agreement on behalf of the party for whom they sign.

Optionor Printed Name:

By:

Date:

Optionee Printed Name:

By:

Date:

What a Real Estate Option Contract Is

A Real Estate Option Contract is a bilateral agreement where an owner (optionor) grants a potential buyer (optionee) the exclusive right to purchase specified real property within a defined period for a stated price or formula. The optionee typically pays consideration (an option fee) to secure the exclusive right, but is not obligated to buy. If the option is exercised according to the contract terms, the parties proceed to a purchase contract or closing; if not exercised, rights lapse at expiration and treatment of the option fee is governed by the agreement.

Why Parties Use an Option Contract

Option contracts provide flexibility: they let potential buyers secure purchase priority while preserving time to inspect, arrange financing, or market property, and they let sellers receive nonrefundable consideration and a defined window to effect a sale. Well-drafted option agreements reduce negotiation friction and clarify responsibilities during the option period.

Who Typically Uses a Real Estate Option Contract

Common users include investors, developers, and brokers arranging exclusive purchase rights without immediate conveyance.

Real estate investors and developers seeking time to perform due diligence and secure financing for a project without committing to immediate purchase.
Brokers and listing agents structuring contingent transactions or marketing off-market opportunities while preserving seller cooperation.
Title companies and escrow officers coordinating recording, lien searches, and closing logistics once an option is exercised.

Understanding each role helps assign signing authority and supporting responsibilities like title review and escrow handling.

Primary Signers and Their Roles

Optionee (Buyer)

The party purchasing the option right; pays option consideration, must comply with exercise procedures and deadlines, and is responsible for providing required notices if exercising the option.

Optionor (Seller)

The property owner granting the option; must honor exclusive period, hold property free of conflicting claims, and cooperate in closing if option is validly exercised.

Essential Data and Fields to Include

Property Description: Street address and legal description

Parties: Full legal names and capacity

Option Period: Start and end dates

Consideration: Amount and payment terms

Purchase Price: Fixed amount or formula

Exercise Notice: Method and delivery details

Common Preparation Mistakes

Using an incomplete legal description, which can create recording and enforceability disputes and delay closing.
Failing to state the option fee's disposition clearly, causing later disagreements over refundable versus nonrefundable treatment.
Leaving the exercise notice method ambiguous, resulting in contested or untimely exercise claims.
Neglecting contingencies (title, financing, zoning) that materially affect whether the optionee can or should proceed.

Primary Risks and Consequences

Forfeiture Risk: Loss of option fee

Breach Liability: Damages or specific performance

Recording Issues: Third-party claim exposure

Tax Reporting: 1099 or income issues

Financing Failure: Transaction collapse

Statute Limits: Timing defects reduce remedies

Key Parts of a Professional Option Contract

A complete option contract clearly allocates rights, timelines, and remedies. Below are the six structural elements that reduce ambiguity and help enforceability.

Parties

Identify full legal names, entity type, and signing authority; include contact information and include capacity statements if an entity signs.

Property

Provide the street address plus the exact legal description or assessor's parcel number so the subject property is unmistakably identified for title and recording.

Option Period

State clear commencement and expiration dates and time-of-day, and specify whether extensions or tolling events are permitted and how they are documented.

Consideration

Specify the option fee amount, payment method, whether it is refundable, and how it will be credited toward purchase price if exercised.

Exercise Mechanism

Describe how the option is exercised, required notice format, delivery method, any confirmation requirements, and deadlines for performance following exercise.

Default and Remedies

Set out remedies for breach by either party (liquidated damages, specific performance, termination rights) and allocation of costs and attorneys’ fees.

Step-by-Step: Completing the Option Contract

Follow these steps in order to prepare, sign, and preserve a valid option agreement with minimal risk.

01

Prepare Draft: Complete all core fields and attach exhibits.
02

Review Title: Obtain title report and clear encumbrances.
03

Execute Agreement: Parties sign; notarize if needed.
04

Distribute Copies: Share executed copies with counsel and escrow.

How to Customize an Online Option Contract Workflow

Configure these settings in your e-signature platform to match the option contract's required sequence, authentication, and reminders.

Field Mapping	Pre-fill party names, dates, and amounts from templates
Signer Order	Set seller then buyer or simultaneous signing
Authentication	Use email + SMS code or enhanced ID check
Expiration Reminders	Auto-notify parties 30/14/3 days before end
Storage	Save signed PDF and audit trail to cloud

Digital Signing Considerations and File Formats

Use a platform that produces a tamper-evident PDF, records an audit trail, and supports common integrations for title and escrow workflows.

Formats: PDF, DOCX supported
Integrations: Connects to escrow and CRM
Legal Frameworks: ESIGN and UETA compliance

Where to Send Executed Copies and When

After execution, route signed copies to the other party, counsel, escrow/title, and retain one complete original; record only if the parties choose or local rules require it.

Other Party: Send executed original or PDF copy
Title/Escrow: Provide for closing and clearing liens
Counsel: Retain a copy for dispute prevention
County Recorder: Record only if intended to notify third parties

Key Dates and Deadlines to Track

Track exercise windows and related deadlines carefully; small timing errors can forfeit rights or create liability.

Option Period End:

Date/time when the option lapses if not exercised

Exercise Notice Deadline:

Last day to provide written notice per agreement

Closing Timeline:

Number of days to close after exercise is stated here

Recording Deadline:

If recorded, specify who records and when

Tax Reporting:

Report option income per applicable tax year

Milestones from Option to Closing

A sequential view of the major milestones helps coordinate title, financing, and closing tasks.

01

Agreement Signed

Parties execute the option and exchange consideration; set the exclusive period

02

Due Diligence

Optionee completes inspections, financing, and title review within the option window

03

Option Exercised

Optionee delivers notice per contract to trigger purchase process

04

Closing Recorded

Execute purchase contract, fund, and record deed if applicable

eSignature Platform Pricing Comparison (signNow first)

Basic pricing and feature availability for common eSignature vendors, with signNow listed first. Confirm vendor sites for plan details and enterprise options.

	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	Yes
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

Frequently Asked Questions

Answers to common legal and execution questions about Real Estate Option Contracts, electronic signing, and retention.

Need help? Contact support

Can an option contract be recorded?
Yes, an option contract can be recorded at the county recorder in many jurisdictions, but recording is optional and may reveal transaction terms publicly. Recording may be used to construct notice against third parties or to perfect interests; consult local recording rules before filing.
Are electronic signatures valid?
Electronic signatures are legally valid for most option contracts under the ESIGN Act (15 U.S.C. ch. 96) and UETA in UETA states; ensure intent, consent, attribution, and reproducible records to meet legal validity requirements.
Do I need a notary or witnesses?
Not all option contracts require notarization or witnesses to be enforceable, but deeds and certain conveyance documents typically require notary acknowledgement for recording. State law varies; use a notary when recording or when statutory formalities demand it.
How can the option be revoked or canceled?
Revocation typically follows the contract terms or mutual written agreement; unilateral revocation before exercise may breach the agreement and expose the revoking party to damages if exclusive rights were granted.
What happens if the option expires?
If the option lapses without exercise, the optionee generally loses exclusive purchase rights and the optionor retains the option fee if the contract states it is nonrefundable; remedy provisions depend on the contract language.
Who should retain the signed originals?
Each party, counsel, and escrow/title should retain a complete executed copy. Follow federal and industry retention rules (e.g., IRS, HIPAA) and keep an auditable electronic copy with the platform’s certificate of completion.

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