Option to Purchase Real Estate

Information & Benefits:
The following information and benefits is what distinguishes us from other online providers.

Summary
An option is a contract which gives its holder the exclusive right for a specified period of time to purchase property at a price set forth in the option agreement pursuant to such agreement's terms and conditions. Since the proposed seller is bound by the option, the party holding the option must give some consideration (usually money) for the right to exercise the option according to the terms of the agreement. This consideration must be given for the option. The consideration given for the actual value of the property is separate.

Introductory Note
Generally, the basic contents of an option agreement include a description of the property, the price of the option, the price of the property, the expiration date of the option, manner of notice for exercising the option, how the option is waived, and whether the option may be assigned.

Property Description
Legal description of the improved real estate and space being leased, if any.

Option Term
This is the same as the expiration date. This is the period of time the option holder has to exercise the option.

Notice
Usually, notice is required to given within the option term, in writing and pursuant to a method that ensures a record of receipt - e.g., certified mail, return receipt requested.

Purchase Price
The total price to be paid for the real estate and terms by which it will be paid. Often, the actual sales contract is attached to the option or included as part of the agreement, and if the option is exercised, all the terms and conditions of the sales contract become effective.

Property Taxes
The proposed seller usually handles expenses related to ownership until title is released. Therefore, taxes would be prorated to reflect the proportionate period of time during which each party holds title.

Assignments
Assignments are generally not wanted by sellers because of the costs associated with determining the viability of a prospective purchaser. However, if the provision is drafted well, an assignment may be effected without substantial risk to seller.

Recording
The Proposed Seller will want to prohibit any recording in order to preserve a clear title. However, the option holder wants to discourage the proposed seller from trying to sell to another during the option period.

Extension
An option may be extended, but additional consideration must be given for each option period. Proposed seller must receive written notice of intent to extend. This may be structured in any way, but often an increasing option price would be required for long term options. This reflects the cost to the proposed seller of keeping a property off the market and provides an incentive to the option holder to exercise early rather than pay extra for an extension.

Mediation and Arbitration
Mediation and Arbitration should always specify a convenient location (preferably, in the same county where the real estate is located). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available).

No Modification or Waiver
No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision.

Entire Agreement
This agreement constitutes the entire agreement of the parties and may be modified only in a writing executed by both parties.

Notices
Notices should always list the current and best addresses where each party may contact the other for whatever reason.

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