Option: An agreement to keep open, for a set period, an offer to sell or lease real property. An option can be used, for example, to give the buyer time to resolve questions of financing, title, zoning and feasibility before committing the buyer to purchase. Options are frequently used in the land assemblage process. The option must be supported by its actual consideration, separate and independent of the purchase price of the property. Mere recital of consideration alone is not sufficient except in a lease-option in which the provisions of the lease are themselves sufficient consideration to support the option. An option merely creates a contractual right; it does not give the optionee any estate in the property. At the time the option is signed, the owner does not sell, nor does the buyer purchase, the property. Although the owner is obligated to sell if given notice by the buyer, the buyer is not obligated to purchase. An option to buy is also known as a call; an option to sell is known as a put.
Real Estate Word of the Day: Option
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