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. 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 to them.
OPTION TO LEASE AGREEMENT This Agreement is made as of ________________, 2_____. BETWEEN: (the "Optionor") - and - (the "Optionee") Recitals: 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, save and except as provided for herein. B. The Optionor has agreed to grant options to lease the Optioned Premises in favour 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 as follows: 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, and legally described as _______________. 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"). 2 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 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 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 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 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 Subsequent Option to Lease with respect to any of the Excluded Premises affected by the Acceptable Offer and shall be free to lease and/or sell Excluded Premises or any part thereof pursuant to the Acceptable Offer. 5. Option Premium in respect of Option to Lease and Subsequent Option to Lease (a) The Optionee shall pay to the Optionor monthly, in advance, commencing on the _____ day of ________, 2____, and on the ____ day of _____, 2_____ and the ____ day of________, 2____, prior to exercise by the Optionee of the Option to Lease, the option premium payment of __________ ($_______) Dollars plus any applicable taxes and on the ____ day of ______, 2_____ and the first day of each following month during the Option to Lease Period, prior to exercise by the Optionee of the Option to Lease, the option premium payment of ___________ ($_______) Dollars plus any applicable taxes (collectively the “Option Premium Monthly Payments”). The Optionor acknowledges timely receipt of the Option Premium Monthly Payments due __________, ___________ and ___________. 3 (b) Notwithstanding the foregoing the Optionee may by not less than thirty (30) days prior written notice from the first day of the month following the date upon which such notice is given to the Optionor terminate this Option to Lease Agre
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