Sign the option agreement and pay the option fee

Both parties sign the Option to Purchase agreement. The buyer pays the agreed option fee — which can range from a few thousand to tens of thousands of dollars depending on the property value and option period. The agreement immediately binds the seller to hold the property exclusively for the buyer during the option period.

Buyer uses the option period to make a final decision

During the option period (commonly 30–90 days for residential transactions), the buyer can arrange financing, sell their existing property, complete a home inspection, or conduct any necessary due diligence. The purchase price is locked in — market fluctuations during this period do not change the agreed price.

Exercise the option — it converts to a binding APS

If the buyer decides to proceed, they formally exercise the option before the deadline (usually with written notice per the contract). The agreement then becomes a binding Agreement of Purchase and Sale. In many cases, the option fee is credited toward the purchase price or applied as the deposit.

Option expires unexercised — fee stays with seller

If the buyer does not exercise the option before the deadline, it expires automatically. The seller keeps the option fee as compensation for having held the property off the market. The seller is then free to list the property again. The buyer walks away with no further obligation — but the fee is gone.

What is the difference between an Option to Purchase and an APS in Ontario?

An APS obligates both parties to complete the transaction. An Option to Purchase only obligates the seller — the buyer pays an option fee to secure the exclusive right to purchase within a set timeframe, but is not required to proceed. If the buyer doesn’t exercise the option, the fee typically stays with the seller.

Is the option fee refundable if I decide not to buy?

In most cases, no. The option fee is consideration paid for the exclusive right to purchase — it’s not a deposit in the traditional sense. If you let the option expire without exercising it, the seller keeps the fee. Some agreements allow the fee to apply toward the purchase price if you proceed, but this must be explicitly stated in the contract.

When does an Option to Purchase make sense in Ontario?

Common scenarios include buyers needing to sell their existing home first, commercial tenants wanting the right to buy the property they’re leasing, buyers needing time to secure financing, or pre-construction situations where a developer offers options before the formal sales launch.

How long does an option period typically last in Ontario?

Option periods are negotiable. In Ontario residential real estate, 30 to 90 days is most common. Longer option periods typically require a higher option fee since the seller is assuming more uncertainty. Commercial options may extend to 6–12 months.

Do I need a lawyer for an Option to Purchase agreement?

Yes — strongly recommended. Option agreements involve complex terms around how and when the option must be exercised, what happens to the fee, price lock provisions, and the seller’s obligations during the option period. A real estate lawyer can protect your interests and ensure the contract is enforceable.