No Installation Needed. Convert PDF to Editable Online. What is an option to purchase (OTP) agreement? Who can exercise an option to purchase in a lease agreement? An option – to – purchase agreement is an arrangement in which, for a fee, a tenant or investor acquires the right to purchase real property sometime in the future.
While option contracts are used in both commercial and residential real property transactions, this article focuses on option to purchase contracts in residential real estate transactions. See full list on nolo. No matter the format, an option to purchase must: 1) state the option fee, 2) set the duration of the option perio 3) outline the price for which the tenant will purchase the property in the future, and 4) comply with local and state laws. In order to be contractually enforceable, the option to purchase must be given in exchange for consideration, or value.
Depending on factors such as the price of the home, the option fee can range from several hundreds to several thousands of dollars. Option fees are typically nonrefundable. In other words, if the tenant decides not to exercise his or her option to purchase the house within the agreed-upon time frame, the tenant forfeits the option money. The option fee is also usually forfeited if the tenant defaults on the lease by failing to make timely and exact rent payments or by breaking a term of the lease (such as housing pets when pets are prohibited).