SO MANY WAYS TO BUY (PART 3) BRUCE KELLOGG
So Many Ways to Buy
(Part 3)
By Bruce Kellogg
#19
Option to Purchase
An option confers the right, but not the obligation, to do something. Real estate examples
include the option to purchase, option to lease, option to renew, option to extend, and so
on. Usually, a prospective buyer negotiates an option to purchase when they want the property, but sometime later.
They give the owner some agreed “option consideration” for the right to purchase the property on mutuallyagreed
terms on or before a specified future date. Option consideration is frequently cash, but it could be personal property,
like a used tractor, or even “personal service” where the future buyer fixes up the property before buying it. If the
option is not exercised, the owner is entitled to keep the consideration. A good practice is to obtain a quitclaim deed
and record it if the option expires without being exercised. This clean up the title.