A buyer pays a $400 option fee by personal check. The seller cashes the check immediately. Two days later, the buyer terminates within the option period. Can the buyer get the option fee back?
Correct Answer
B) No, because the option fee is non-refundable regardless of when or why the buyer terminates
The option fee is non-refundable once delivered to the seller. This is true regardless of whether the buyer terminates during the option period, after the option period, or proceeds to closing. The non-refundable nature is the consideration for the option right.
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Related Topics & Key Terms
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Related Concepts
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
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.
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