A tenant has an option to purchase leased property. The price that the tenant will pay for the property is determined by the:

An option to purchase is a unilateral contract where the property owner (optionor) gives a prospective buyer or tenant (optionee) the right to purchase the property at a fixed, predetermined price within a specified period. The essential terms of the potential sale, most critically the purchase price, are negotiated and explicitly defined within the written option agreement itself. When the tenant decides to exercise the option, they are agreeing to the terms as they were originally written, not renegotiating them. The core benefit for the tenant is locking in a purchase price, regardless of future market fluctuations.

B. The price is determined when the option contract is created, not when the right to purchase is exercised.

C. The contractually fixed price is a key feature of an option; it is not based on the future market value.

D. The price is a mutually agreed-upon term in the contract, not a term the tenant can decide unilaterally.

1. Galaty, F. W., Allaway, W. J., & Kyle, R. C. (2022). Modern Real Estate Practice (21st ed.). DF Institute, Inc. In Chapter 11, "Real Estate Contracts," the section on Option Agreements clarifies that an option binds the seller to a fixed price, and the buyer must exercise the option based on the specific terms and conditions laid out in the original agreement.

2. New Jersey Administrative Code, Title 11, Chapter 5 (New Jersey Real Estate Commission), Subchapter 6.4(a). This regulation states that all contracts of sale and leases prepared by licensees shall be in writing and "indicate their exact terms and conditions." For an option to purchase within a lease, the purchase price is an exact term that must be included in the written contract from its inception.