Real estate purchase contracts do not always entail an immediate sale. An option contract may be formed to ensure that an offer is not revoked once it is made, even though the sale may take longer. The property owner will extend an offer to sell in return for the buyer's payment, and this offer stays open for a period of time at a particular price. In some cases, the buyer is a developer that is interested in buying land but needs to do more research, or the buyer may be a tenant renting the property. Once an option is exercised, a binding contract is formed, and the seller and the buyer are both required to perform under the terms of the contract. At Stok Folk + Kon, our Fort Lauderdale real estate lawyers can help you negotiate and create an option agreement.Understanding an Option Agreement
Option agreements must meet the requirements for forming a contract in order to be enforceable. They have just two elements: an underlying contract that does not bind the parties until it is accepted and the agreement that the recipient of the offer has the opportunity to accept within a particular time frame. Like other contracts, an option contract must include consideration. Otherwise, it is simply an offer, rather than an enforceable contract.
The consideration that makes the agreement enforceable needs to have an objective value. However, it may be a promise to perform a particular act or refrain from performing a particular act.
When an option contract is exercised, it ripens into a purchase and sale agreement. Until that point, it is a unilateral contract that requires the offeror to hold open their offer to enter into a purchase and sale agreement for the property.
Most option agreements have a deadline after which the seller may sell the real estate to someone else, unless the option holder decides to buy it. Although the seller may not sell the real estate for a specific period, this period has a definite end date. When an option holder fails to do anything, in most cases, the option expires on its own. However, an option holder may choose to buy the real estate under the terms specified in the option agreement.
In some cases, a property owner may create a contract that gives someone else the right of first refusal. This is the right to be the first choice as a buyer in the event that the property owner wants to sell. For example, some tenants have an option agreement in connection with their lease.
If a third party expresses interest in buying the property for a particular price with specific terms and conditions, the property owner is required to provide the party with the right of first refusal with the details. That party may require the seller to sell the real estate to them under the same terms and conditions as the third-party offer. However, if the right of first refusal is declined, the seller may proceed with the sale to the third party. The language of the agreement is controlling in cases of sellers who need to sell the property and want to accelerate the option holder’s decision-making.Consult an Experienced Real Estate Lawyer in the Fort Lauderdale Area
There are multiple situations in which it may be beneficial to both a seller and a potential buyer to have an option agreement, such as cases involving family members, neighbors, or other tightly knit communities. The Fort Lauderdale real estate attorneys at Stok Folk + Kon can provide you with experienced legal counsel in connection with an option agreement. We have represented condo owners, homeowners, landlords, tenants, business owners, property management companies, and private equity lenders. We also serve people and businesses that need a real estate or construction litigation lawyer in Hollywood, Fort Lauderdale, Hallandale, Coral Springs, Pembroke Pines, and other cities throughout Broward, Miami-Dade and West Palm Beach Counties. Call us at (954) 237-1777 or complete our online form to set up an appointment.