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Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

Option Contract

An option contract in real estate grants one party the right, but not the obligation, to buy or lease property at agreed terms within a specified period in exchange for option consideration paid to the optionor, creating a unilateral offer that becomes binding when the optionee exercises.

Exam context

Option is unilateral until exercised. Consideration required. Optionee chooses to buy; optionor must sell if exercised. Right of first refusal triggers on third-party offer, not unilateral buyer choice.

Key terms

The option states strike price, expiration date, and whether assignment is allowed. Option money is typically non-refundable and compensates the owner for taking the property off the market. Exercise requires notice within the window, converting the option into a binding purchase contract on predetermined terms.

Common uses

Developers option land pending zoning approval. Lease-option arrangements apply rent credits toward purchase. Investors option distressed homes for wholesale assignment where permitted. Agents must distinguish options from contingent purchase contracts that bind both parties once accepted.

Examples

  • Land development option

    A builder pays $25,000 for a 180-day option to purchase 20 acres at $2 million if rezoning succeeds, walking away if council denies without further obligation.

  • Lease-option tenant

    A tenant pays $5,000 option fee for the right to buy the home at $310,000 within two years while renting, applying part of monthly rent toward down payment if exercised.

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