The Option Contract (Real Estate) is a crucial document in Philippine real estate transactions where parties wish to secure future purchase rights while maintaining flexibility. It is commonly used when potential buyers need time to arrange financing, conduct due diligence, or await certain conditions before committing to a purchase, while property owners want to secure a serious buyer with upfront consideration. This document type is governed by Philippine civil law, particularly the Civil Code of the Philippines and the Property Registration Decree, requiring specific formalities for validity and enforcement. It typically includes detailed property descriptions, option and purchase prices, timeframes, exercise mechanisms, and obligations of both parties. The contract serves various purposes in both commercial and residential real estate transactions, from securing development opportunities to facilitating phased property acquisitions.
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1. Parties: Identifies and provides complete details of the Option Grantor (property owner) and Option Holder, including their legal capacity to contract
2. Background: Recitals explaining the context of the agreement and the parties' intentions
3. Definitions: Defines key terms used throughout the agreement
4. Grant of Option: Details the specific right being granted to purchase the property, including the exact nature and scope of the option
5. Option Period: Specifies the duration of the option and any conditions for extension
6. Option Price: States the consideration paid for the option right itself
7. Purchase Price: Specifies the agreed price for the property if the option is exercised
8. Property Description: Detailed legal description of the subject property, including title details and encumbrances
9. Exercise of Option: Procedures and requirements for exercising the option
10. Payment Terms: Structure and timing of payments, both for the option and the purchase price
11. Representations and Warranties: Statements of fact and guarantees by both parties regarding the property and their capacity to enter the agreement
12. Default and Remedies: Consequences of breach and available remedies
13. Governing Law: Confirms Philippine law as governing law and jurisdiction
14. Execution: Formal closing section including signature blocks and notarization requirements
1. Due Diligence: Provisions allowing the Option Holder to conduct property investigations, used when the option period includes a due diligence phase
2. Conditions Precedent: Specific conditions that must be met before the option can be exercised, included when there are particular requirements
3. Assignment Rights: Terms governing whether and how the option rights can be transferred, included when assignment might be contemplated
4. Broker Provisions: Details of any broker involvement and commission arrangements, included when brokers are involved
5. Financing Contingency: Terms related to the Option Holder's ability to secure financing, included when relevant to the transaction
6. Environmental Matters: Specific provisions regarding environmental conditions and responsibilities, important for commercial properties
7. Existing Tenancies: Provisions dealing with current tenants' rights, included when the property is leased
8. Force Majeure: Provisions for unforeseen circumstances affecting the agreement, included when extended option periods are contemplated
1. Property Details Schedule: Comprehensive technical description of the property, including boundaries, certificates of title, and tax declarations
2. Payment Schedule: Detailed breakdown of payment terms and dates for both option fee and purchase price
3. Due Diligence Documents: List of documents provided or to be provided for due diligence
4. Form of Exercise Notice: Template notice for exercising the option
5. Property Plans and Surveys: Technical drawings, surveys, and plans of the property
6. Encumbrances List: Detailed list of any existing liens, encumbrances, or restrictions on the property
7. Required Permits: List of necessary permits and certificates for property transfer
Authors
Relevant legal definitions
Clauses
Relevant Industries
Real Estate
Property Development
Construction
Commercial Property
Residential Property
Urban Planning
Property Investment
Real Estate Finance
Agriculture (for agricultural land)
Industrial Development
Retail Property
Hospitality
Relevant Teams
Legal
Real Estate
Property Management
Compliance
Finance
Business Development
Corporate Strategy
Operations
Risk Management
Investment
Due Diligence
Relevant Roles
Real Estate Lawyer
Property Developer
Real Estate Broker
Property Manager
Legal Counsel
Compliance Officer
Real Estate Investment Manager
Property Acquisition Manager
Business Development Manager
Corporate Lawyer
Land Development Officer
Real Estate Finance Manager
Property Rights Specialist
Transaction Manager
Due Diligence Officer
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