What type of contract gives a developer the right to buy land at a fixed price within a specified time?

An option is a specific type of agreement that grants a developer the right to purchase a property at a predetermined price within a designated time frame. This arrangement allows the developer to secure the land without the obligation to buy it immediately, providing them with the opportunity to assess the feasibility of their project or to seek financing.

The essence of an option lies in its unilateral nature, where one party (the seller) provides the other party (the developer) with the exclusive right to purchase the property while retaining ownership until the option is exercised. This contractual arrangement is particularly useful in real estate, as it allows the developer to lock in a price and timeframe without making an upfront purchase, which can be beneficial in a market subject to price fluctuations.

Other contract types mentioned do not serve the same purpose. For example, a bilateral contract for sale involves mutual obligations from both parties to fulfill the terms of the sale, while a covenant of title is related to the seller’s assurances regarding ownership and rights to the property, not a purchase option. A contingent contract typically depends on specific conditions being met before the agreement is binding, which is different from the straightforward nature of an option.