Exercising Option to Purchase Real Property Being Leased Without Cash
July 7, 2009

Q: I want to exercise an option to purchase the real property I am leasing, but I can't pay cash. Can I make the purchase contingent on financing?

A: Probably not. The answer to this question depends on the language of the option provision. In a 2008 decision, the Maryland Court of Appeals reiterated that the exercise of an option must be “in exact accord with the terms of the option.” If the option clause did not contain a financing contingency, then your purchase of the property cannot be conditional on financing. It is critical to the effective exercise of an option that it be done in strict accordance with the terms of the option itself. Moreover, extreme care must be taken to exercise the option effectively prior to the expiration date of the option.

If you have questions, please contact:
John Wise, Esquire

JWise@TandLLaw.com