option contract

Definition

An agreement giving someone the right, but not obligation, to purchase property at a set price within a specified timeframe. It's essentially renting the opportunity to decide later, popular with investors who want to control property without owning it yet.

Example Usage

They paid $5,000 for a six-month option contract while waiting for zoning approval on their development plans.

Origin

Contract law terminology dating to 17th century English common law

Fun Fact

Unlike earnest money, option fees are typically non-refundable, making them pure profit for sellers if the buyer doesn't exercise the option.

Source: Real estate contract and investment terminology

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