An Option to Lease is an agreement between a tenant and a landlord for a tenant to
occupy a rental premises with an option to purchase the premises at the end of the term
of the lease. This document in its draft form contains numerous of the standard clauses
commonly used in this type of option; however, additional language may be added
allowing for customization to ensure the specific language of the parties is addressed.
A rental property with an option to lease is useful for the tenant who wishes to purchase
the property in the future but does not have the money immediately available.
OPTION TO LEASE AGREEMENT
This Agreement is made as of ________________, 2_____ (the "Effective Date"), by and
between_____ ________________________________(“Optionor”) and
A. The Optionor is the owner with a good and marketable title in fee simple to the Optioned
Premises (as defined herein), free and clear of encumbrances, except as provided for
B. The Optionor has agreed to grant options to lease the Optioned Premises in favor of the
Optionee, upon the terms and conditions set out herein.
NOW THEREFORE in consideration of the mutual covenants contained herein, other
good and valuable consideration, and the sum of ________ ($_____) now paid by the Optionee
to the Optionor, the receipt and sufficiency of which is hereby acknowledged, the parties agree
1. Truth of Recital A
The Optionor hereby represents and warrants to the Optionee that Recital A is true in substance
and in fact.
2. Description of Optioned Premises
The lands and premises (the “Optioned Premises”) are more particularly described on
Schedule “A” annexed hereto.
3. Grants of Option Relating to Optioned Premises
The Optionor hereby grants to the Optionee an exclusive, irrevocable option to lease the
Optioned Premises (or a portion thereof, as provided herein) on the terms set out in this
Agreement (the "Option to Lease").
4. Term of Option to Lease and Grant and Term of Subsequent Option to Lease
(a) The Optionee may exercise the Option to Lease by written notice (the “Exercise
Notice”) to the Optionor at any time until the ___ day of ________, 2____ (the
"Option to Lease Period"). The Optionee shall be entitled in the Exercise Notice
to stipulate all or a portion of the Optioned Premises as being the lands subject to
the exercise of the option (the “Initial Exercise Premises”), by sketch or map
attached to the Exercise Notice delineating such Initial Exercise Premises.
(b) In the event that pursuant to the Exercise Notice the Initial Exercise Premises are
less than the Optioned Premises, then with respect to the remainder of the
Optioned Premises (the “Excluded Premises”), the Optionor hereby grants to the
Optionee a continuing exclusive, irrevocable option to lease the Excluded
Premises (or a portion thereof as provided herein) on the terms set out in this
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Agreement (the “Subsequent Option to Lease”). The Optionee may exercise the
Subsequent Option to Lease by written notice (the “Subsequent Exercise Notice”)
to the Optionor at any time until the ____ day of ________, 2_____ (the
“Subsequent Option to Lease Period”). In the event the Optionee delivers the
Subsequent Exercise Notice, the Optionee shall be entitled to exercise its option
in respect of a portion of the Excluded Premises, provided that the remainder of
the Excluded Premises are not subject to the exercise of such option (the
“Subsequently Excluded Premises”).
(c) Provided that the Optionor shall be permitted to continue to market and offer the
Excluded Premises or any part thereof for lease and/or sale to a third party or third
parties and if a satisfactory offer to lease or sell the Excluded Premises or any part
thereof is received by the Optionor (the “Acceptable Offer”), the Optionor may
notify the Optionee in writing thereof and the Optionee shall be required within
ninety (90) days from _____ p.m. on the date of receipt of the said notice to
provide a Subsequent Exercise Notice of its intention to exercise the Subsequent
Option to Lease, failing which, the Optionor may terminate the Su