What is an option to purchase?

An option to purchase is a type of real estate contract commonly used in Kentucky residential real estate law. This type of contract is used to give one party the option to purchase real estate from another party at a set price within a certain amount of time. The party who has the option to purchase, also known as the option holder, pays the other party a fee in exchange for the right to purchase the real estate. This fee is known as an option fee. Typically, the option to purchase contains the name of the parties, a description of the real estate, the option fee, the time period during which the option holder can exercise the option, and the purchase price. The option holder may choose to exercise the option and purchase the real estate at any time during the option period, while the other party must honor the terms of the contract. If the option holder does not exercise the option within the designated time period, the agreement does not have any further legal effect and the option fee is forfeited to the other party. Therefore, it is important that the option holder carefully consider the terms of the option to purchase before signing the agreement.

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