The Lock-Out-Options Agreement


Contents:

 

While some people purchase their dream property immediately upon their first tour of a
prospective home, others may need more time to find the right fit and consummate the
transaction.

Needing additional time is not a bad thing, and there are numerous reasons you may want to
proceed carefully.

A potential buyer may need extra time to secure financing to purchase a property or to consider
several different real estate opportunities.

When a buyer needs more time than they originally anticipated for effectuating a purchase, they
may want to ensure that a particular property is available at a fixed price during a more convenient
point in the future.

In this situation, a buyer may request to use a real estate option agreement. On behalf of the
buyer, we can negotiate the terms of an OPTION agreement with the seller for a specific period.

 

What is an “Option” to Purchase Real Estate?

An option to purchase real estate is a contract between the property owner and optionee (buyer).
Instead of buying the property right away, an option allows the buyer to pay a certain sum of
money for the right to purchase the property on or before a later date. In exchange, the buyer will
have the exclusive right to buy that property prior to the expiration of the option.

A real estate option works the same as an option contract in other areas of contract law. The
option contract sets a specific purchase price and definite period of time for the buyer to make the
purchase at his or her discretion. For an option contract to be legally enforceable, it must be:

– In writing,
– Signed by the seller and buyer,
– Exchanged for an amount of money (called consideration) at the option price. This money is said
to be paid “in consideration” to own the exclusive option to purchase the property.
– Irrevocable for both parties: The seller must commit to allowing the buyer to exercise the option
within the stated period and for the agreed-upon consideration; they cannot suddenly decide to
terminate the option early or sell the property to another person during the option period.
On the other hand, the buyer must pay the seller, and the amount of money paid in consideration
can’t be refunded if the buyer backs out.

 

Typical terms:
Although these agreements vary, there are some provisions which should usually be considered:
– Legal formalities: in order to be enforceable, the contract should contain consideration (€ 1,000-
2,000 will be enough),
– Lockout period clearly defined: it must be clear that the obligations apply for a fixed maximum
period.
– Contract termination conditions outline the specific circumstances under which a contract can be
legally ended before its natural completion.

 

Can I Cancel an Option?

Because a seller must honor an option obligation for which a buyer pays in advance, the power to
“cancel” the option is within the buyer-optionee’s discretion. That is, a buyer who has paid the
option fee can either sign an option cancellation agreement, or they can allow the option to expire
by refraining from the exercise of option to move forward with the purchase agreement for the
property. In the event that the seller withdraws from the agreement, the buyer will be refunded the
amount paid twice.

 

When Is an Option a Good Idea?

Buyers who want a purchase option should negotiate with the seller over the terms of the contract.
A seller can agree to an option for any price or any time period. However, sellers are generally
more likely to agree to a real estate option when:

– They can’t sell the property for fair market value or when the real estate market is cold.
– The option contract allows the buyer to purchase the property for a fair sum, if they decide to go
forward with the deal.
– The seller receives a significant amount in financial consideration for the option.
– The buyer leases the home as a rental property for the term of the option, so that the seller is not
losing money while maintaining a property that they wish to sell.

 

What’s the next step after the purchase agreement?

The next step is a notarized preliminary purchase agreement with a down payment of between
10% and 30% of the purchase price. The preliminary purchase agreement can be registered, but
it’s best to have it transcribed.
In the context of a preliminary real estate agreement (compromesso) in Italy, registration and
transcription are distinct legal acts with different purposes.

Registration is primarily a fiscal formality, ensuring the preliminary agreement is officially dated for
tax purposes.

Transcription, on the other hand, is a protective measure for the buyer, making the preliminary
agreement enforceable against third parties and preventing subsequent prejudicial actions by the
seller.

 

What are our office fees if the buyer or seller cancels the purchase?

If either party cancels the purchase for a reason other than stated in the option agreement, they
owe our office a fee of 1.5% of the purchase price plus VAT, with a minimum of € 3,500 plus VAT.

The information in this brochure and publication is compiled with the greatest care:
nevertheless, no rights may be derived from this information and attachments. We
recommend that you check with the embassy in your country for the specifications and
available information regarding your plans.

 

 

Updated: 8 September, 2025

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