Options to purchase, lease options and lease purchase agreements are three different financing documents. The variances are state specific and not all states have identical laws. Before entering into an agreement with a seller, buyers should obtain the advice of a real estate lawyer. The information below is an overview and is not meant to be construed as legal advice.
Basics of an Option
Buyer pays the seller option money for the right to later purchase the property. This option money may be substantial or as little as $1.
Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the option.
The term of the option agreement is negotiable, but the common length is generally from one year to three years.
Option money is rarely refundable.
Nobody else can buy the property during the option period.
The buyer can sell the option to somebody else.
If the buyer does not exercise the option and purchase the property at the end of the option, the option expires.
The buyer is not obligated to buy the property.
Randy Bailiff
Dean Graziosi Investment and Life Coach
Options to purchase, lease options and lease purchase agreements are three different financing documents. The variances are state specific and not all states have identical laws. Before entering into an agreement with a seller, buyers should obtain the advice of a real estate lawyer. The information below is an overview and is not meant to be construed as legal advice.
Basics of an Option
Buyer pays the seller option money for the right to later purchase the property. This option money may be substantial or as little as $1.
Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the option.
The term of the option agreement is negotiable, but the common length is generally from one year to three years.
Option money is rarely refundable.
Nobody else can buy the property during the option period.
The buyer can sell the option to somebody else.
If the buyer does not exercise the option and purchase the property at the end of the option, the option expires.
The buyer is not obligated to buy the property.
Randy Bailiff
Dean Graziosi Investment and Life Coach