Sale contracts, options, and contracts for deed
The sale contract
The sale contract (also called a purchase contract or contract for sale and purchase) is where the buyer and seller set the terms of the deal: price, deposit, financing, closing date, inspection and other contingencies, who pays which costs, and what happens if someone defaults. Once both parties sign and the final acceptance is communicated, it is a bilateral, express, executory contract. It becomes executed at closing, when the seller delivers the deed and the buyer pays.
Because it is a contract for the sale of land, it must be in writing and signed by the party to be charged to be enforceable under Florida's statute of frauds (Fla. Stat. 725.01).
The sale contract is not the deed. The contract is the promise to transfer; the deed delivered at closing is what actually transfers title.
Options
An option is a contract in which an owner, for consideration, gives someone the right to buy the property at a set price (or by a set formula) within a set period.
| Party | Role | Bound? |
|---|---|---|
| Optionor | The owner who grants the option | Yes. Must sell on the stated terms if the option is exercised in time, and cannot revoke it during the period |
| Optionee | The person who holds the option | No. May choose to buy or let the option expire |
Before it is exercised, an option is a unilateral arrangement: only the optionor is bound. If the optionee exercises it properly, it becomes a bilateral contract of sale. If the option period ends without exercise, the option simply expires and the optionor keeps the option money.
Consideration matters here. A plain offer can be revoked any time before acceptance. Paying for an option is what makes the owner's promise to hold the offer open binding.
A lease with an option to purchase combines a lease with an option. The tenant rents now and has the right, but not the duty, to buy later.
Right of first refusal
A right of first refusal gives its holder the chance to match a third party's offer before the owner sells to that third party. If the holder matches, they buy on those terms. If they decline or the deadline passes, the owner may sell to the third party.
The key difference from an option: the holder of a right of first refusal cannot force a sale. Nothing happens until the owner decides to sell. An optionee, by contrast, can buy whenever they choose during the option period, whether or not the owner wants to sell.
Contracts for deed
A contract for deed (also called a land contract or installment sale contract) is a form of seller financing:
- The buyer takes possession right away and pays the price in installments.
- The seller keeps legal title until all payments are made.
- When the buyer pays in full, the seller delivers a deed transferring legal title.
During the payment period the buyer is often described as holding equitable title: the right to get legal title once the contract is paid off. Because the buyer can pay for years without holding a deed, this arrangement carries real risk for buyers, and anyone entering one should have an attorney review it.