Purchase Options in Commercial Real Estate Transactions

Summary

This practice note examines the essential components and use of purchase options in leases, license agreements, easement agreements, and real estate joint venture agreements. Depending on the transaction, a purchase option may be included as a provision in any of these agreements or alternatively may be addressed in a stand-alone option agreement. For information on joint ventures, see Real Estate Joint Ventures, Exit Provisions in Limited Liability Company Operating Agreements, and Right of First Offer on Sale of Property (Joint Venture Agreement). For more information on purchase options, see Tenant Purchase Options in Commercial Leases and Structure and Taxation of Commercial Leases. For a form of purchase option clause, see Tenant Purchase Option Clause (Appraisal Method, Commercial Lease) (Pro-Landlord).