Key Terms Every Writer Should Know in an Option Purchase Agreement

The potential of a great story may cause a bidding war, but it could just as easily be gathering dust on a shelf somewhere. The difference between these two possibilities is usually determined by one document in Hollywood. The producers need time to raise money and attract talent before making a costly purchase of a story in the form of a book, script, or life story. On the other hand, writers and rights holders want to get paid for their work. To resolve this conflict,  Option purchase agreements in LA. This article describes what these agreements do and where they could become an issue for writers.What Is an Option Purchase Agreement?

An option is a purchase agreement with deferred exercise of such right until a specified date or event. Imagine making a deposit for the purchase of real estate while you gather money for the mortgage. For the specified fee, the producer gets the exclusive rights from the owner of the book, script , article or life story.

Once the deal becomes profitable , the producer exercises the option and buys the property for the predetermined price.

Important Terms For Any Creators To Know

The vast majority of options will use only a few specific terms. Knowing those terms first will make any negotiation go much smoother.

• Option fee: The up-front fee paid to keep the rights. This can be a small amount, but it needs to be there.

• Option period: The time that the buyer gets to decide, usually around a year or longer.

• Extension: The additional time, which may cost more money.

• Purchase price: The price paid if the buyer decides to exercise the option. This is usually a set amount or percentage of the budget.

• Reserved rights: Rights that the creator keeps, including publication rights.

• Chain of title: Paperwork showing that the creator actually owns the work.

Example of an Option Agreement

Take the case of a writer who has produced a thrilling book. A producer wants it and pays an option fee for 18 months of exclusive rights to buy the property. In those 18 months, the producer markets the book to film studios and attempts to get a director involved.

Even though the novelist is not allowed to sell the movie rights during that period, he retains ownership of the novel. In the case where a studio opts to invest, the producer buys the property by exercising his option and pays the novelist the agreed purchase price.

Mistakes to Avoid

Producers tend to be more concerned with the price, but there is a lot of fine print to watch out for:

• Granting too many rights. If the rights clause is too vague, it may grant sequels, remakes, and merchandise.

• Having no end date. Without one, a producer will have your work for an unlimited amount of time.

• Forgetting to revert rights. If the project does not come to fruition, your rights will revert back to you.

• Disregarding back-end clauses. Bonuses, credits, and percentages of the profits are better to discuss now than later.

How Local Legal Counsel Makes a Difference

Although these documents appear straightforward, it is important to note that slight changes in the wording may have real financial consequences. An attorney who deals with these kinds of contracts daily can identify potential risks right away, particularly when handling Option Purchase Agreements in LA.

Lastine Entertainment Law is a boutique law firm located in Beverly Hills that represents writers, authors, producers, and studios. The firm also negotiates acquisition and development agreements with writers and other creators. Whatever side you are representing, whether you own the rights or are trying to acquire them, having an attorney review every option purchase agreement is crucial.

A free consultation is available at the firm. Please remember that this article provides only general information and not legal advice.