Also known as: option to purchase · option to purchase agreement · purchase option · call option
Written by attorneys · grounded in primary & secondary sources — see below
A contractual right granting the holder the power to compel the sale of property or securities at a predetermined price within a defined period. The right is supported by consideration that renders the offer irrevocable for its stated duration.
Olivia Owens signed a letter expressing interest in leasing land from Overland Transport. After negotiations the parties orally agreed on an eight-year lease that included an option to purchase the parcel. Neither document alone identified the land, but the two signed writings together supplied the required memorandum under the statute of frauds.
Olympus Banking issued convertible notes that expressly included an option to purchase additional shares of the corporation at a fixed price. The board relied on its statutory power to create such obligations. Investors later exercised the embedded purchase option and received the shares.
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Oriana Oberman granted Oasis Resorts a written option to purchase a commercial parcel for a fixed sum. The agreement stated no duration. Because the option was not appurtenant to any leasehold, a court held that it remained exercisable only for a reasonable time after grant.
Oswald Orozco conveyed an office building to a buyer while retaining an option to repurchase the property exercisable more than twenty-one years after lives in being. The New York Court of Appeals held the option unenforceable because it violated the statutory rule against perpetuities.
Odessa Okada and her joint tenant leased their property to Outback Mining for ten years and included an option to purchase. The joint tenant died during the term. The California Supreme Court held that the lease and option did not sever the joint tenancy, so the surviving tenant took the entire interest by right of survivorship.
Orion Orlov sought a coastal development permit to rebuild a beachfront home. The commission conditioned approval on Orlov's transfer of a lateral easement across the property to the public. The Supreme Court treated the condition as an exaction equivalent to an uncompensated option to acquire public access rights.
Yes. Under the traditional rule, an option to purchase creates a contingent future interest that is void if it might vest, if at all, later than twenty-one years after lives in being at creation. Courts apply the rule at the time of grant using a what-might-happen test.
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Yes. Where two or more documents are signed by the party to be charged, they may be read together even though neither contains any reference to the other. The question whether they constitute a sufficient memorandum is the same as if they had been incorporated in a single document.
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A standalone option to purchase property lasts for a reasonable time. The duration of an option appurtenant to a leasehold estate is instead determined by landlord-tenant law.
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No. The power of acceptance under an option contract is not terminated by death or incapacity of the offeror unless the requirements are met for discharge of a contractual duty.
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…After years of rental use, however, the building had fallen into disrepair, and could no longer be rented out. The Nollans' option to purchase was conditioned on their promise to demolish the bungalow and replace it. In order to do so, under Cal. Pub. Res. Code Ann. §§ 30106, 30212, and 30600 (West 1986), they were required to…