Buyer-broker agreements and option contracts

Two agreements, two purposes

A buyer-broker agreement engages a brokerage to provide services to a buyer. An option gives a prospective purchaser a right to buy specified property on stated terms within a stated period. Hiring the brokerage does not itself commit the buyer to purchase property.

Buyer-broker terms

Identify the parties, services, property scope, duration, compensation, and termination terms. Compensation is negotiable; distinguish when it is earned from when it is payable and specify credits for payments from other sources. An exclusive right to represent agreement can require compensation for a covered purchase even if the buyer finds the property. Exclusive agency generally preserves a self-procurement exception. A nonexclusive agreement permits multiple brokerages, with compensation governed by their agreements. Actual language controls; labels do not supply missing terms. Exclusivity does not itself establish the brokerage relationship.

In Florida, single agent duties include loyalty, confidentiality, obedience, and full disclosure. In a covered residential transaction, written single agent disclosure is due before or at the representation agreement or before showing property, whichever occurs first. It may be separate or properly incorporated. Transition from single agent to transaction broker requires the principal's prior written consent.

Option mechanics

The optionor grants the right; the optionee holds it. Consideration supports the owner's commitment while the optionee remains free not to buy. Before exercise, this is commonly classified as unilateral. A land purchase option should be in a signed writing satisfying the statute of frauds. Exercise must comply with the option's deadline and method; proper exercise creates the contemplated purchase obligations. Exercise is not closing. Expiration without exercise ends the purchase right, and the owner ordinarily keeps the option consideration. Credit toward the price depends on the agreement. A right of first refusal instead provides a purchase opportunity upon its specified trigger.

Florida connections

Florida prohibits sham options used to evade licensing requirements. The statutory exception addresses options backed by substantial consideration actually paid without an agreement or reserved right to return it. Florida's rental exemption from brokerage disclosure requirements does not extend to a rental with an option to purchase property improved with four or fewer residential units.