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Option To Buy Agreement

Option To Buy Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Option To Buy Agreement

"I need an Option to Buy Agreement for a commercial warehouse property in Riyadh Industrial City, with a 6-month option period starting March 1, 2025, including special provisions for environmental due diligence and existing tenant rights."

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Document background
The Option To Buy Agreement is a crucial document in Saudi Arabian real estate transactions, providing a structured framework for securing future property purchase rights while complying with local laws and Sharia principles. It is commonly used when parties need time to arrange financing, conduct due diligence, or secure regulatory approvals before committing to a full purchase. The agreement must navigate both Saudi civil law requirements and Islamic commercial principles, particularly regarding certainty in contracts and permissible payment structures. It is especially relevant in commercial real estate transactions, property development projects, and investment deals where parties need to secure their interests while maintaining flexibility. The document includes comprehensive details about the property, pricing, timeframes, and exercise mechanisms, while incorporating necessary provisions for regulatory compliance, including foreign investment restrictions where applicable.
Suggested Sections

1. Parties: Identification of all parties including full legal names, addresses, and registration details where applicable

2. Background: Context of the agreement and relationship between parties

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Grant of Option: Clear statement of the option being granted, including exclusivity provisions

5. Property Details: Comprehensive description of the property subject to the option

6. Option Period: Duration of the option, including start and end dates

7. Option Price: Amount payable for the option itself

8. Purchase Price: Agreed purchase price for the property if option is exercised

9. Exercise of Option: Process and requirements for exercising the option

10. Payment Terms: Details of how and when payments must be made

11. Seller's Covenants: Obligations of the seller during the option period

12. Property Access: Terms for inspection and access to the property during the option period

13. Completion Requirements: Requirements and process for completing the sale if option is exercised

14. Termination: Circumstances under which the agreement may be terminated

15. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction

16. Execution: Signature blocks and execution requirements

Optional Sections

1. Shariah Compliance Declaration: Statement confirming the agreement's compliance with Shariah principles - required for transactions involving Islamic financial institutions

2. Foreign Ownership Provisions: Additional requirements if buyer is a foreign entity - required for non-Saudi buyers

3. Municipal Approvals: Specific provisions regarding required municipal approvals - needed for properties requiring development or change of use

4. Financing Provisions: Terms related to buyer's financing arrangements - included when purchase will be financed

5. Due Diligence: Detailed provisions for property investigation - needed for commercial properties

6. Environmental Matters: Environmental investigation and liability provisions - required for industrial properties

7. Existing Tenancies: Provisions dealing with current tenants - needed if property is leased

8. Development Conditions: Specific conditions related to property development - required for undeveloped land

Suggested Schedules

1. Property Description Schedule: Detailed legal description of the property including title deed details

2. Property Plans: Maps, floor plans, and other visual representations of the property

3. Option Exercise Notice Form: Template form for exercising the option

4. Title Documents: Copies of relevant title documents and certificates

5. Permitted Encumbrances: List of accepted encumbrances on the property

6. Due Diligence Documents: List of required due diligence documents and certificates

7. Payment Schedule: Detailed breakdown of payment terms and timelines

8. Property Condition Report: Current condition assessment of the property

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Business Day
Completion
Completion Date
Deposit
Due Diligence Period
Effective Date
Exercise Notice
Exercise Period
Expiry Date
Extension Notice
Force Majeure
Governmental Authority
Liabilities
Municipality Approvals
Option
Option Fee
Option Period
Permitted Encumbrances
Property
Property Documents
Purchase Price
Real Estate Registry
Registration Fees
Regulatory Approvals
Related Parties
Relevant Authority
RETT
Saudi Law
Seller's Warranties
Sharia Compliant
Termination Date
Termination Notice
Title Deed
Transfer Date
Valid Exercise
Clauses
Recitals
Definitions
Grant of Option
Option Fee
Option Period
Exercise of Option
Purchase Price
Payment Terms
Property Access
Due Diligence
Title and Ownership
Property Condition
Representations and Warranties
Seller's Covenants
Buyer's Covenants
Conditions Precedent
Completion Requirements
Property Registration
Assignment and Transfer
Force Majeure
Regulatory Compliance
Sharia Compliance
Municipal Approvals
Foreign Ownership
Default
Termination
Notices
Confidentiality
Dispute Resolution
Governing Law
Entire Agreement
Severability
Amendments
Costs and Expenses
Further Assurance
Relevant Industries

Real Estate

Commercial Property

Residential Property

Industrial Property

Retail Property

Hotel & Hospitality

Manufacturing

Logistics & Warehousing

Office Space

Mixed-use Development

Construction & Development

Investment & Finance

Relevant Teams

Legal

Real Estate

Finance

Compliance

Business Development

Property Management

Investment

Risk Management

Operations

Corporate Development

Asset Management

Acquisitions

Relevant Roles

Real Estate Manager

Property Development Director

Legal Counsel

Commercial Director

Investment Manager

Chief Financial Officer

Property Acquisition Manager

Real Estate Investment Analyst

Compliance Officer

Business Development Manager

Property Portfolio Manager

Asset Manager

Risk Manager

Corporate Lawyer

Real Estate Broker

Development Project Manager

Industries
Saudi Civil Law (Royal Decree No. M/5): Governs basic contract formation, validity requirements, and enforcement mechanisms for commercial agreements including options
Real Estate Registration Law (Royal Decree No. M/6): Regulates property registration, transfer procedures, and documentation requirements for real estate transactions
Commercial Courts Law (Royal Decree No. M/93): Provides framework for resolving commercial disputes, including those related to option agreements and property transactions
Anti-Commercial Concealment Law: Ensures transparency in commercial transactions and prevents unauthorized use of names in business dealings
Foreign Investment Law (Royal Decree No. M/1): Regulates foreign ownership of property and business interests in Saudi Arabia, including restrictions and requirements
Capital Market Law (Royal Decree No. M/30): Relevant for option agreements involving listed companies or regulated investment properties
Electronic Transactions Law (Royal Decree No. M/18): Governs electronic signatures and digital documentation in commercial transactions
Sharia Principles on Gharar (Uncertainty): Islamic law principles prohibiting excessive uncertainty in contracts, affecting how option terms must be structured
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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