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Option Contract (Real Estate) for Canada

Option Contract (Real Estate) Template for Canada

A Canadian real estate option contract is a legally binding agreement that gives the option holder the exclusive right, but not the obligation, to purchase specified real property at a predetermined price within a defined time period. This document, governed by Canadian provincial property laws and contract principles, outlines the terms of the option, including the option premium, exercise period, purchase price, and conditions precedent. It includes provisions for due diligence, property inspection rights, and title review requirements, while ensuring compliance with provincial land transfer regulations and registration requirements.

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Option Contract (Real Estate)

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What is a Option Contract (Real Estate)?

The Option Contract (Real Estate) is a crucial document in Canadian real estate transactions, used when a potential buyer needs to secure the right to purchase a property while conducting due diligence or arranging financing. This agreement is particularly valuable in commercial real estate development, land assembly projects, or when market conditions require a staged approach to property acquisition. The document must comply with provincial real estate laws and the Statute of Frauds requirements for land contracts. It typically includes detailed property descriptions, option terms, exercise procedures, and purchase conditions. The Option Contract (Real Estate) serves as a risk management tool, allowing the option holder to control the property's availability while limiting their initial financial commitment to the option premium.

What sections should be included in a Option Contract (Real Estate)?

1. Parties: Identification of the option grantor (property owner) and option holder, including full legal names and addresses

2. Background: Context of the agreement, relationship between parties, and general purpose of the option

3. Definitions: Key terms used throughout the agreement, including Property, Option Period, Exercise Price, and Option Premium

4. Grant of Option: Clear statement of the option being granted, including the exclusive right to purchase the property

5. Option Premium: Details of the consideration paid for the option, payment terms, and whether it's applicable to the purchase price

6. Option Period: Duration of the option, including start and end dates, and any extension provisions

7. Exercise of Option: Process and requirements for exercising the option, including notice requirements

8. Purchase Price: Specified purchase price or calculation method for the property if option is exercised

9. Property Description: Legal description and details of the property subject to the option

10. Title and Due Diligence: Rights regarding property inspection, title review, and related conditions

11. Representations and Warranties: Standard representations about property ownership, authority to contract, and property condition

12. Assignment: Whether and under what conditions the option may be assigned to third parties

13. Notices: How and where formal notices must be delivered between parties

14. Governing Law: Specification of applicable Canadian provincial law and jurisdiction

15. General Provisions: Standard boilerplate clauses including entire agreement, amendments, and severability

What sections are optional to include in a Option Contract (Real Estate)?

1. Environmental Matters: Specific provisions regarding environmental inspections and liabilities, used for commercial or industrial properties

2. Development Rights: Rights to conduct development studies or submit planning applications during the option period, used for development properties

3. Financing Conditions: Conditions related to the option holder's ability to secure financing, used when financing is a key consideration

4. Multiple Properties: Special provisions for options covering multiple properties or parcels, used in portfolio deals

5. Right of First Refusal: Additional rights if the owner receives third-party offers during the option period

6. Tenant Rights: Provisions addressing existing tenants' rights, used for leased properties

7. Construction Access: Rights to access the property for construction planning, used for development properties

8. Property Management: Obligations regarding property maintenance during the option period, used for longer option terms

What schedules should be included in a Option Contract (Real Estate)?

1. Schedule A - Property Description: Detailed legal description of the property, including survey references and parcel numbers

2. Schedule B - Option Premium Payment Terms: Detailed payment schedule and terms for the option premium

3. Schedule C - Permitted Encumbrances: List of accepted liens, easements, or other encumbrances on the property

4. Schedule D - Form of Exercise Notice: Template notice for exercising the option

5. Schedule E - Due Diligence Materials: List of documents and materials to be provided for due diligence

6. Appendix 1 - Property Plans: Site plans, surveys, or architectural drawings of the property

7. Appendix 2 - Environmental Reports: Existing environmental assessments or reports

8. Appendix 3 - Title Documents: Copies of title documents and registered encumbrances

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Cost

Free to use
Relevant legal definitions








































Clauses

































Relevant Industries

Real Estate

Commercial Property

Residential Property

Industrial Property

Land Development

Construction

Property Investment

Real Estate Investment Trusts (REITs)

Urban Planning

Agriculture (for farmland options)

Retail (for retail spaces)

Hospitality (for hotel properties)

Relevant Teams

Legal

Real Estate

Property Development

Investment

Acquisitions

Asset Management

Due Diligence

Finance

Risk Management

Corporate Development

Relevant Roles

Real Estate Lawyer

Property Developer

Real Estate Investment Manager

Land Acquisition Manager

Real Estate Broker

Property Manager

Development Director

Real Estate Portfolio Manager

Legal Counsel

Contract Administrator

Real Estate Analyst

Investment Analyst

Chief Investment Officer

Real Estate Director

Acquisition Specialist

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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