This option agreement (the Agreement) is entered into as of [date], between [name of seller], a [entity type], [address] (Seller), and [name of buyer], a [entity type], of [address] (Buyer), on the terms and conditions set forth below.
1. Purpose. Seller owns the property described in the attached exhibit A (the Seller Parcel), which is under development and a portion of which is in the [name of condominium] site condominium, which is expandable to cover the entire property that is the subject of the option granted by this Agreement. Buyer seeks an option to purchase a part of the Seller Parcel as described in the attached exhibit B (the Premises). The parties enter into this Agreement to allow Buyer to acquire the Premises subject to this option Agreement.
2. Term of the option. This Agreement shall be in effect until [date].
3. Exercise of the option. Buyer may elect to exercise the option on all or a part of the Premises. Buyer may exercise the option as many times as it elects during the term of this Agreement to acquire the Premises. However, Buyer may not purchase less than one acre of the Premises at a time, and each parcel of the Premises that Buyer elects to acquire shall be adjacent to Buyer’s other parcels, be a unit in [name of condominium] site condominium, or be approved by Seller for conveyance as a land division of the Premises and have been approved for a land division by [township].
4. Exercise. Buyer may elect to acquire all or a part of the Premises at any time during the term of this Agreement by notifying Seller in writing of its election to purchase all or part of the Premises. The notice may be delivered in person, by certified mail, or by overnight delivery service. Buyer may exercise the option provided for in this Agreement on one or more occasions by giving notice to Seller at Seller’s address stated above or at a subsequent address that Seller provides to Buyer in writing. The written notice of the exercise of the option shall specify the parcels of the Premises that are to be acquired pursuant to the exercise and the Buyer’s calculation of the purchase price pursuant to the survey provided for below. If Seller disputes Buyer’s calculation of the purchase price, Seller shall notify Buyer within 10 days after Seller receives the notice of the exercise of the option.
5. Purchase price. The purchase price for the Premises is $[amount] per square foot. The purchase price for each closing shall be set by multiplying the per-square-foot price times the number of square feet established by the survey as set forth below. The per-square-foot purchase price of the Premises will be increased annually on the anniversary of the effective date of this Agreement by a percentage equal to the percentage increase in the Consumer Price Index, All Cities, published by the U.S. Department of Labor for the month this Agreement goes into effect and the most recently published index at the anniversary date of this Agreement.
6. Consideration for this Agreement. As consideration for this Agreement, Buyer has conveyed to Seller the right to use a driveway easement for the benefit of the Seller Parcel established by the declaration of easement recorded at document number [number] of the [county] Register of Deeds. The Seller Parcel is be a benefited property under the declaration of easement.
7. Title. Seller agrees to convey good and marketable title to the Premises to Buyer for any portion of the Premises on which Buyer exercises the option. Any conveyance under this Agreement shall be by warranty deed. At each closing, Seller shall purchase title insurance on the conveyed portion of the Premises in the name of Buyer. The insurance must show good and marketable title to be in the name of Buyer.
8. Survey. If Buyer exercises the option, Buyer shall order a survey of the parcels to be conveyed to be prepared by the surveyor for the development on the Seller Parcel. The survey shall show no encroachments on the parcels to be conveyed. Buyer shall pay the invoice for the survey at or before the closing. The survey shall be certified to Seller, Buyer, and any other parties Buyer designates.
9. Closing. This sale shall be closed within 10 days after all the closing documents are prepared but no later than 45 days after the date of the notice of the exercise of the option. Buyer shall be responsible for preparing the warranty deed to be signed and given at the closing. Seller shall pay the transfer tax at the closing.
10. Prorations. Seller shall pay all real estate taxes invoiced on any parcel of the Premises to be conveyed before the date of the closing of that parcel. Buyer shall pay real estate taxes invoiced after the date of the closing of any parcel of the Premises. If a real estate tax invoice is issued after the date of closing for a parcel that Buyer has acquired but the taxes for the parcel are still included under the Seller Parcel, the parties shall divide the tax invoice proportionately with each party to pay a portion of the tax invoice equal to its proportion of the square feet of the property listed on the tax invoice. Seller shall pay any special assessments levied against any parcel of the Premises to be conveyed before the date of the closing, whether or not the assessments are payable in installments.
11. Termination of the option. If Buyer fails to exercise the option before it expires, Buyer’s right to exercise the option shall terminate.
12. Assignment and binding effect. This Agreement is assignable. This option will benefit and bind the parties to this Agreement and their heirs, legal representatives, successors, and assigns and shall run with the land affected by this Agreement.
13. Time of the essence. Time is of the essence in the performance of this Agreement.
14. Exhibits. The following exhibits are attached to and a part of this Agreement:
$ Exhibit A-Legal description of the Seller Parcel
$ Exhibit B-Legal description of the Premises
15. Effective date.This Agreement shall be effective as of the date when all the parties listed below have signed it.
By /s/______[Typed name of seller or signer for seller]
Its: [Capacity of signer]
By /s/______
[Typed name of buyer or signer for buyer]
Its: [Capacity of signer]
STATE OF MICHIGAN / )
______COUNTY / )
Acknowledged before me in [county] County, Michigan on [date], by [name of officer or agent, title of officer or agent], of [name of corporation acknowledging], a [state or place of incorporation] corporation, on behalf of the corporation.
/s/______[Notary public’s name, as it appears on application for commission]
Notary public, State of Michigan, County of [county].
My commission expires [date].
[If acting in county other than county of commission: Acting in the County of [county].]
Drafted by and when recorded return to:
[Name and address of drafting attorney]
By /s/______
[Typed name of seller or signer for seller]
Its: [Capacity of signer]
By /s/______
[Typed name of buyer or signer for buyer]
Its: [Capacity of signer]
STATE OF MICHIGAN / )
______COUNTY / )
Acknowledged before me in [county] County, Michigan on [date], by [name of officer or agent, title of officer or agent], of [name of corporation acknowledging], a [state or place of incorporation] corporation, on behalf of the corporation.
/s/______[Notary public’s name, as it appears on application for commission]
Notary public, State of Michigan, County of [county].
My commission expires [date].
[If acting in county other than county of commission: Acting in the County of [county].]
Drafted by and when recorded return to:
[Name and address of drafting attorney]