A seller in Paducah, Kentucky signs an option contract granting a prospective buyer the exclusive right to purchase the seller's commercial property for $500,000 within 90 days. The buyer pays $2,000 for the option. Twenty days later, the seller receives a better offer and wants to sell to the new buyer instead. Under Kentucky law, what is the seller's legal position?
Correct Answer
C) The seller is legally bound by the option contract and cannot sell to another party during the 90-day period
An option contract is an enforceable agreement under Kentucky law in which the optionor (seller) grants the optionee (buyer) the exclusive right to purchase property at a set price within a specified period, in exchange for consideration (here, $2,000). The seller is legally obligated to keep the offer open for the full 90-day period. Selling to another party during this time would constitute a breach of the option contract, exposing the seller to damages or specific performance.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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