An option is a right given for consideration to purchase or lease property upon specified terms within a specified time. Sometimes the terms may be determined at a specific time period, or the price may be determined from an appraisal. There may be consideration paid for a period of time, with additional consideration paid to extend the time if the option is not exercised and the purchase completed. An option or right to purchase is granted by the property owner (optioner) to the potential buyer (optionee). An option may be recorded and become an encumbrance against the property to show a right to purchase or even indicate an equitable interest in the property. An option may be transferred, and in many cases an option could become very valuable especially if a price is fixed in the option and the value of the property increases beyond that value.

A lease is the right to use the property for a specified term at a stated rental amount. A lease also is a recordable encumbrance against the property. A lease with the option to purchase could have many different twists. A portion of the lease could be applied towards the purchase if the option is exercised. None of the rent could apply, or all of the rent could apply.

The power of an option, or a lease with an option, is that you have the use and control of the property. An option generally is favorable towards the optionee.