Buyout

Non-finance usage

• An employer may "buy out" an employee's contract by making a single prepayment, so as to have no ongoing obligation to employ the person;
• A landlord may buy out the remainder of a tenant's lease, effectively paying them to vacate.
• A government may buy out homes in a floodplain or other area subject to hazard. The language used by FEMA, a United States agency, is "acquisition".
• In Major League Baseball, a club option is an optional year at the end of the ballplayer's contract that may be guaranteed at the discretion of the team. Usually, the option comes with a "buyout" which represents a fraction of the value of the option. If at the time that the club is in a position to exercise its option the team decides not to exercise the option, the team will usually pay the buyout and decline the option. Generally, this results in the ballplayer becoming eligible to be a free agent. Alternatively, if the contract turned one of the ballplayer's arbitration-eligible seasons into an option season, the team can decline the option with the ballplayer then entering the arbitration process instead.
• In real estate a landlord has the opportunity to buyout their tenant on a mutually agreed upon price. Most of the time landlords use buyouts to remove rent-stabilized tenants and move in a tenant who will pay a higher rent. This type of buyout can create benefits for both parties.