Laws, Regulations & Annotations

C

220.0000 CHANGE IN OWNERSHIP

Annotation 220.0448

220.0448 Option. The date of change in ownership is generally the date the option is exercised, unless economic compulsion exists at the time the option is created, in which case both parties are, in effect, mutually obligated to complete the contract, similar to a sales agreement. If an option agreement is actually a form of a sales contract, a change in ownership will result at the time the option is created. Economic compulsion may be a test for determining whether an option to purchase actually constitutes a sales contract. An initial, non-refundable deposit, equivalent to less than ten percent of the purchase prices, alone does not rise to the level of economic compulsion. A purchaser's defined stream of non-refundable payments toward the property's equity during the option period is also not a sale from the outset when the seller retains possession of the property throughout the option period, and thus retains beneficial ownership. C 11/7/2016.