What Is anOption to Purchasein Ontario?

A tenant rents a property while holding an option to purchase it at a fixed price — often at the end of the lease term. This is popular with buyers who cannot yet qualify for a mortgage but want to lock in today’s price while they build their credit or savings.

A buyer identifies a property but needs 60–90 days to finalize financing or sell an existing home. An option locks the price and takes the property off the market while they get their ducks in a row.

Developers sometimes sell options on units before construction begins — allowing them to gauge demand and lock in committed buyers, while giving buyers flexibility before full commitment.

Commercial buyers routinely use options during lengthy due diligence periods — zoning reviews, environmental assessments, income verification — before committing to a full purchase agreement.

If the fee is too low, a seller in a rising market may simply choose to forfeit it and relist at a higher price. The fee has to hurt enough to keep the seller honest — but not so high that the buyer is over-committed before due diligence is done.

30–180 days covers most scenarios. Too short and the buyer can’t complete financing or inspections. Too long and most sellers won’t agree. Find the shortest period that genuinely meets your needs.

The Ontario Court of Appeal has ruled on option-to-purchase clauses where ambiguous language invalidated the entire agreement. Every word matters. Your lawyer — not a template — must draft this.

Sometimes the option fee is credited toward the deposit or purchase price upon closing. This must be explicitly stated in the agreement — if it is not written in, it does not apply.