2023 Buying time: Options contracts in real estate

Recording available after original program date, 9/1/2023

Options in commercial real estate transactions give the option holder more time to conduct due diligence, obtain financing and any necessary governmental approvals, and consider whether the transaction is truly viable. The property owner, whose land is optioned, loses the right to sell the property to a third party for the duration of the option, but earns a fee for doing so. In a world of complex and risky commercial real estate transactions, where time is often of the essence and risk is high, options allow developers, investors and others an effective mechanism to buy time and take a wait-and-see-approach. This program will provide you with a practical guide to drafting essential provisions of options in commercial real estate transactions, including avoiding costly traps. 

•    Negotiating and drafting most essential terms of option contracts in real estate transactions.
•    Economics of real estate option contracts, including the purchase price of the underlying property and market volatility.
•    Duration of exclusive period, fees, and extensions – and relationship to market conditions.
•    Nature of exclusive period – access to property, restrictions on marketing, cooperation in obtaining permits.
•    Role of contingencies – financing, regulatory, market variables.
•    Practical uses, traps, and alternatives to options.

Note: This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for GAL Certification, ethics, elimination of bias or Kansas credit.