To record a memorandum of option agreement, you prepare a short notice document that identifies the parties, describes the property, and references the underlying option, then have both parties sign it before a notary and file it with the county recorder or registrar of deeds where the property is located. The memorandum keeps the price and sensitive terms out of the public record while still putting future buyers, lenders, and title searchers on notice that your right to purchase exists.
The difference between an enforceable claim and a piece of paper that protects no one usually comes down to what the memorandum contains and whether it clears the recorder’s requirements the first time.
What the Memorandum Must Contain
A memorandum does not need to reproduce the full option agreement, but it has to include enough information to function as a valid recorded instrument. Missing an element can trigger a rejection at the counter, or worse, a later court finding that the document failed to give constructive notice.
- Full legal names of the optionor (property owner) and optionee (the party with the right to buy), spelled exactly as they appear on the current deed. A misspelled name or abbreviated entity name can break the chain of title and make the document invisible to a title search.
- A legal description of the property. A street address is not sufficient. Use the metes and bounds description or the lot and block information from the recorded plat so the document indexes to the correct parcel.
- The option period, including when it begins and when it expires. Without clear dates, a title searcher cannot tell whether the option is still active.
- An express reference to the underlying unrecorded option agreement between the same parties, confirming that the memorandum is a notice of a privately held deal rather than a standalone contract.
- Signatures of both parties, acknowledged by a notary public. The notarization is what gives the document the formality required for recording; without it, the recorder’s office will reject the filing.
Some jurisdictions require more, such as a tax parcel number or a statement of consideration. A quick call to the local recorder’s office or a title company before you finalize the document is the cheapest way to find out.
Signing, Notarizing, and Filing
Once both parties have signed and a notary has acknowledged the signatures, the memorandum goes to the county recorder or registrar of deeds in the county where the property sits. Most offices accept filings in person, by mail, or through an electronic recording platform. Electronic recording has expanded significantly, and the majority of Americans now live in counties that accept digital submissions, though adoption is not universal.
When the office accepts the document, the recorder stamps it with the date and time of filing and assigns a unique reference number, usually a book and page or an instrument number. That timestamp is what establishes priority: any interest recorded afterward is junior to yours. Processing speed varies. Some offices return the recorded original the same day; others take several weeks.
Formatting Rules That Cause Rejections
County recorders have formatting requirements, and a document that misses them gets sent back, which leaves you unprotected in the meantime. Common rules include minimum one-inch margins on all sides with a larger top margin on the first page for the recorder’s stamp, a specific minimum font size, and a return address printed on the document. Confirm the local rules before you print the final version.
Recording Costs
Fees are set by each jurisdiction and typically run on a per-page basis, which is one of the reasons the memorandum is kept short. A one-to-three page memorandum generally costs between $10 and $50 to record in most counties, though some jurisdictions charge more. Notary fees for acknowledging signatures usually range from $2 to $25 per signature depending on the state.
A memorandum of option generally does not trigger documentary transfer taxes, because those apply when ownership actually changes hands, not when a party records notice of a future right to purchase. Transfer taxes come into play later, if you exercise the option and a deed is recorded. Some jurisdictions have unusual rules, so confirm with the recorder’s office before filing if you want to avoid a surprise bill.
Why Recording Matters
Recording creates what the law calls constructive notice. Once the document is in the public record, every subsequent buyer, lender, or lien holder is legally presumed to know the option exists, whether they actually checked or not. A buyer who takes the property with constructive notice of a prior interest takes it subject to that interest, so if someone purchases the land during your option period, your right to buy survives the sale.
Skip recording and you are gambling. If the owner sells to a buyer who pays fair value and genuinely does not know about the option, that buyer may qualify as a bona fide purchaser and take the property free of your interest. Your remedy at that point is a breach of contract claim against the original owner, which means chasing money rather than getting the property.
Make Sure the Underlying Option Is Enforceable
Recording a memorandum does not, by itself, make an option enforceable. The underlying agreement has to be supported by consideration, meaning you paid something of value in exchange for the owner’s promise to keep the offer open. Without consideration, a court may treat the option as an unenforceable one-sided promise, and the memorandum becomes a cloud on title backed by nothing.
The consideration does not have to be large. A nominal payment can be enough, provided it was actually exchanged and documented in the option agreement. In many states, an option that can be exercised indefinitely or far into the future may also run into the rule against perpetuities, a doctrine that limits how long future interests in land can remain open. Options tied to a definite and reasonable timeframe face fewer challenges.
Releasing the Memorandum When the Option Ends
This is the step people forget, and it causes real problems. When the option period expires without exercise, or when the option is exercised and the sale closes, the memorandum needs to come off the public record. Otherwise it sits there as a cloud on title, potentially blocking a future sale or refinance by the owner.
The standard way to clear it is a release or termination document, sometimes called a release of memorandum of option. The optionee signs it, a notary acknowledges the signature, and it is filed with the same county recorder. Once recorded, title searchers can see the option is no longer active. In some situations the optionee may instead sign a quitclaim deed relinquishing any interest in the property, which transfers whatever interest they may have held and clears the cloud.
Build the exit into the paperwork from the start. The option agreement should require the optionee to execute a release promptly after expiration, and some agreements include a power of attorney allowing the owner to record the release on the optionee’s behalf if the optionee fails to cooperate. Without those protections, an uncooperative former optionee can force the owner into a quiet title action, which takes time and costs money that a single clause in the original agreement would have avoided.