What is an option to purchase?

An option to purchase is a type of real estate contract used in Delaware that allows a tenant to purchase a property from a landlord at a price and terms previously agreed upon. This type of agreement is beneficial for both buyers and sellers because it helps to secure the sale and allows the buyer to lock in the price and terms ahead of time. The option agreement includes two sections—the option and the purchase agreement. The option is the legal document that grants the tenant the right to purchase the property in the future, while the purchase agreement sets out the terms and conditions of the sale. The tenant must pay the landlord an option fee in exchange for the option to purchase the property. The option fee is usually maxed out at 3% of the agreed-upon purchase price for the property. When the tenant exercises the option, the option fee is credited towards the purchase price. The option to purchase allows the buyer to purchase the property without having to first secure financing, giving them time to make arrangements or fixes to the property that could potentially increase its market value. This is beneficial for buyers because it gives them more time to make a decision on the sale. It also allows the landlord to receive a sure sale, since the tenant is obligated to purchase the property if they decide to exercise the option.

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What is an option to purchase?

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