What is an option to purchase?

An option to purchase is a type of contractual agreement, typically between a seller and prospective buyer. It grants the buyer the right to purchase a given property at a certain price by a certain date. In the state of New Hampshire, options to purchase are considered legal and binding. When a property is under an option to purchase, the buyer must pay a certain sum to the seller, known as the option fee. This fee is considered “earnest money” that is held in escrow while the buyer exercises the option. If the buyer fails to go through with the purchase, then the seller keeps the option fee. In New Hampshire, there is no required time frame for exercise of the option. However, it is typically either a 30 day or 60 day period from signing of the written agreement. Once the buyer exercises the option, they must pay the agreed-upon purchase price according to the terms of the agreement. The purchase price does not include the option fee, which must be paid separately. Once payment is made, the seller must execute a deed to transfer title of the property to the buyer. After that, the buyer can consider themselves the rightful owner of the property.

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