Let's say I use a lease option on a house that I own. I set it up for the tenant/buyer to purchase the home after two years of occupancy at its current appraised value of $250K. Then the two years is up and the market value of the home sinks to $175K. The bank will be unlikely to lend based on the old appraised value. What happens to the contract that I have with the purchaser of them home if the market value drops significantly?
The contract reads, or should read, that the owner of the option has the right to buy the property at the predetermined price. It doesn't, or shouldn't, guarantee any price.
If the property value is less than the option price, the owner of the option doesn't have to buy it. It's THEIR option, but the price is the price.
They can still buy it at that price, with the bank financing what they will finance, and the owner of the option, now the buyer, puts up the difference.
You, as the seller of the option, are under no obligation other than to honor the contract...which states the term and the price of the option.
Notice, I only used the word "buyer" once, when the "option" was being exercised.