Option Contract to Purchase Real Property

An Option Contract to Purchase Real Property is an agreement whereby there are two parties, the buyer and the seller. In this agreement, the buyer offers to buy the property from the seller and the seller offers to exclusively sell the property to the buyer within a specific period of time. This means before the period lapses and the buyer decides to buy the property, the property should be sold to the buyer only and not to anyone else. Real properties that can be offered for sale under this agreement include a parcel of land, a house, a condominium, or the like.

Duration of the Agreement

During the period or duration of the agreement, the property will not be available for sale to any other person (except for the buyer) so long as the buyer pays a sum of money called option money. If this period lapses and the buyer does not buy the property, the option money will be forfeited in favor of the seller and the seller will no longer be prohibited from selling the property to any other person apart from the buyer. Further, during this period, the buyer can decide to proceed with the purchase of the property.

Option Money

An option money is the consideration or amount paid by the buyer so that the seller promises not to sell the property to any other person apart from the buyer. This can be deducted from the eventual purchase price of the property or made separate and distinct from the same (meaning the option money will not be deducted from the purchase price).

Note that this document is not a contract to sell or a deed of sale. If the buyer decides to buy the property before the lapse of the period or duration of the agreement, then the parties can subsequently enter into a contract to sell or a deed of absolute sale depending on the terms of their agreement.

How to use this document

The following information should be provided if applicable to complete the document:

• Information concerning the identity of the buyer and the seller,
• The details of the real property which is offered for sale,
• The option money, and the manner by which it is paid, and
• The purchase price (or the price with which the property will be sold).

The following should be attached if applicable:

• The proof of authorization for the representatives, such as a Secretary's Certificate if the party or parties are corporations, a Partners' Certificate if the party or parties are partnerships, or a Special Power of Attorney if the party or parties are sole proprietorships.
• A copy of the Transfer Certificate of Title or Condominium Certificate of Title.

This document should be acknowledged before a notary public, and the parties (or their respective representatives) should present themselves before a notary public with all the original copies of the document and their attachments. The parties (or their respective representatives) should also bring a competent form of identification, such as a passport or driver's license.

The notary public will keep one original copy of the document, and both parties should each keep an original copy of the document for their records.

Applicable law

An Option Contract to Purchase Real Property is governed by the Civil Code of the Philippines. The 2004 Rules on Notarial Practice is also applicable if the document will be acknowledged before a notary public.

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