An option contract in Alabama:
Correct Answer
B) Gives the buyer the right, but not the obligation, to purchase within a specified time in exchange for option consideration
An option contract is a unilateral agreement where the seller grants the buyer the right to purchase within a stated period for separate option consideration. The buyer is not obligated to buy.
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Related Topics & Key Terms
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Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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