What is an Option?

An option is the right to acquire a piece of property by subsequent payment of additional money. Once you have discovered a piece of property that you want to acquire the rights for, the first thing you usually do is make an option agreement with the owner. With an option, you pay a small sum (this could range from one dollar to 20% of the overall purchase price) which then allows you to acquire the right to purchase the rights within a specified period of time. In other words, you are paying to reserve those rights in case you decide to buy them in the future. The specified period of time is known as the option period. You can negotiate the length of this time with the owner. During this time you as the producer will try to put the movie together by assembling all the appropriate elements. Should you decide that you want to own the rights and exercise your option, you would pay the remaining amount of the purchase price. Should you decide not to exercise your option, the rights would then revert back to the owner.

WORD OF CAUTION

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