Under the TREC One to Four Family Residential Contract, all of the following statements about the option fee are correct EXCEPT:
Correct Answer
D) The option fee is refunded to the buyer if the seller defaults on the contract
If the seller defaults on the contract, the buyer's remedies are addressed in Paragraph 15 (Default). The option fee, once paid, is the seller's money. The buyer's remedies for seller default include specific performance and damages, not recovery of the option fee specifically as an option fee refund.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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.
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