An option contract gives the buyer:
Correct Answer
B) The right, but not the obligation, to purchase the property within a specified time
An option contract grants the buyer (optionee) the exclusive right to purchase a property at a set price within a specified period, but does not obligate the buyer to do so. The seller (optionor) is bound and cannot sell to another party during the option period. The buyer typically pays consideration (option money) to keep the offer open, which is generally non-refundable if the buyer chooses not to exercise the option.
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Related Topics & Key Terms
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Related Concepts
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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