What is an option agreement?
An option agreement is a contractual document required when
investors and developers purchase land under an option. An option
gives the purchaser time to undertake due diligence, secure
required funds, and submit any development applications regarding
rezoning or subdivision of the land.
Usually prepared by lawyers, with a standard contract for sale
annexed to it, an option agreement includes terms such as the
agreed purchase price of the land, a commencement date for the
option agreement to begin, as well as an expiry date which is the
last day the purchaser has to "call" the option.
Under an option agreement, a vendor is referred to as the
grantor of the option, and the purchaser is referred to as the
grantee.
