The purchase option: an irrevocable right to buy

A purchase option is an irrevocable right to buy something in the future at a predetermined price and conditions. The holder may exercise the right but is not obliged to do so; the seller who granted the option can no longer revoke it. If the holder exercises the option, a purchase agreement is automatically concluded — unlike a right of first refusal, where a sale cannot be enforced.

Rental or lease agreements sometimes include a purchase option. This is attractive to the tenant or lessee because it is an irrevocable right: the owner who granted it can no longer revoke it.

What is a purchase option?

A purchase option is an irrevocable right to buy in the future at an already agreed price or condition. It is an offer by the seller which the prospective buyer is free to accept. If the holder exercises his right, a valid purchase agreement is automatically concluded — this conclusion no longer depends on acceptance by the seller, because the latter's offer is binding on him. The holder is not obliged to buy himself.

A purchase option differs from a right of first refusal. With a purchase option, the sale is concluded immediately as soon as the holder exercises their right. With a right of first refusal, the counterparty cannot be compelled to sell; if it wishes to sell, the holder of the right of first refusal is merely given the first opportunity to purchase.

Examples of a purchase option

A purchase option can be included in various agreements. A tenant may have a purchase option on the house they rent: if they exercise it, the landlord must sell for the stipulated amount. A purchase option may also be included in a lease agreement , allowing the lessee to purchase the leased car at the end. A purchase option can also arise independently of such agreements, for example, on a home offered for sale.

What is stated in a purchase option?

A seller does not want to remain in uncertainty indefinitely, so the validity period is often limited: a week, a month, a year — or even one specific day, for example, the day the lease or rental agreement expires. In addition, the purchase option usually already includes the purchase conditions, such as the price or a mandatory down payment (for example, ten percent).

Why a purchase option?

A purchase option is particularly attractive to the holder: he has the certainty that he can purchase before a certain date and under known conditions, without obligation. He thus retains both a cooling-off period and certainty. It can also be useful for the grantor, provided he is certain that he wishes to sell under those conditions: it can end the search for a buyer and build trust to persuade a prospective tenant or lessee.

Frequently Asked Questions

What is the difference between a purchase option and a right of first refusal?

With a purchase option, the sale is concluded automatically when the holder exercises their right. With a right of first refusal, the seller cannot be forced to sell; the holder only gets the first opportunity if the seller *wants* to sell.

Am I, as a holder, obliged to buy?

No. A purchase option is a right, not an obligation. You may buy, but you do not have to. The seller, however, is bound as long as the option is valid.

Can a seller revoke a purchase option?

No, a purchase option is irrevocable for the agreed term. Therefore, that term is often limited in time.

Have a purchase option drafted

The legal experts at MKB Juristen include a binding purchase option in your rental, lease, or purchase agreement. View our expertise in contract law or schedule an intake meeting .