A buyer in Texas negotiates a 15-day option period with a $500 option fee on a $350,000 home. The buyer uses the option period to conduct inspections, review the title commitment, and obtain appraisals. On Day 14, the buyer decides to proceed with the purchase. At closing, the $500 option fee is:
Correct Answer
C) Credited to the buyer as part of the purchase price
Under the TREC contract, when the buyer proceeds to closing, the option fee is credited to the buyer's purchase price. This means the option fee effectively becomes part of the buyer's down payment or closing costs.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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