Required Information for an Option Contract

An option contract must include all the basic elements of a valid contract, such as:How long the option lastsThe names of the partiesThe purchase priceA legal description of the propertyThe amount and terms of the option feeAssignable Options: Unless the contract says otherwise, an option contract may be assigned, meaning the optionee can transfer their rights to another person.Licensee Requirements: Real estate licensees are generally allowed to prepare option contracts, especially when using standard forms. However, because there is limited court guidance on this issue, many licensees choose to use attorney-prepared documents or recommend that clients consult an attorney.If a licensee wants to obtain an option on a property for themselves (not as a broker or agent), they must clearly disclose that they are acting as a principal, not as a licensee. They must pay real consideration for the option and fully inform the property owner of their personal interest in the transaction.