Option Agreement Attorneys in Fort Lauderdale

What are Option Agreements?

Real estate purchase contracts do not always entail an immediate sale. An option agreement, also called 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. An options contract will ensure that the sale will be secured at a strike price before it expires.

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 Kon + Braverman, our 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.