Option To Purchase

Learn how an option to purchase works in Canadian real estate, when it’s used, and how it protects both parties in lease-to-own or commercial agreements.

Option To Purchase

May 22, 2025


What is an Option To Purchase?

An option to purchase is a clause in a contract that gives one party the exclusive right — but not the obligation — to buy a property within a specified time frame and at agreed-upon terms.

Why Option To Purchases Matter in Real Estate

In Canadian real estate, options to purchase are common in lease-to-own and commercial transactions. The buyer pays an option fee for the exclusive right to purchase the property in the future. This right is not transferable and typically expires if not exercised by a set date.

Option agreements typically include:
  • Purchase price or pricing formula
  • Duration of the option period
  • Non-refundable option fee
  • Terms under which the option can be exercised
These clauses benefit buyers who need time to secure financing or meet specific conditions, while sellers may use them to secure a potential sale while continuing to receive rental income. Legal review is crucial to ensure enforceability.
Understanding the option to purchase helps buyers structure flexible agreements and evaluate their rights before committing to full ownership.

Example of an Option To Purchase

A commercial tenant signs a five-year lease with an option to purchase the building at $950,000. They have the right to buy anytime during the lease term by providing written notice.

Key Takeaways

  • Grants right, not obligation, to buy.
  • Includes fee, price, and deadline.
  • Used in rent-to-own and commercial deals.
  • Requires clear terms and legal advice.
  • Can support long-term investment planning.

Related Terms

Additional Terms

Sales-To-New-Listings Ratio (SNLR)

The Sales-To-New-Listings Ratio (SNLR) is a real estate metric that compares the number of homes sold to the number of new listings in a given period.. more

Market Type

Market type refers to the classification of a real estate market based on supply, demand, and pricing trends, typically categorized as buyer’s,. more

Outparcels

Outparcels are stand-alone commercial properties located near or on the outer edge of a larger retail or shopping centre complex.. more

Halo Effect

The halo effect in real estate refers to the positive influence that a popular or high-end development has on the surrounding property values and. more

Sump Pump

A sump pump is a mechanical device installed in the lowest part of a basement or crawl space to remove accumulated water and prevent flooding.. more

Structural Integrity

Structural integrity refers to a building’s ability to withstand its intended loads without failure, deformation, or collapse during its lifecycle.. more

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