California Real Estate SalespersonContractsMedium
A buyer pays a seller $2,000 for the exclusive right to purchase a vacant lot at a fixed price anytime within the next 90 days. The buyer is not obligated to buy. What type of agreement is this?
- AAn open listing agreement
- BA unilateral option contract
- CA right of first refusal
- DA bilateral purchase agreement
Show answer & explanationAnswer & explanation
Correct answer: B. A unilateral option contract
An option contract gives the optionee (buyer) the right, but not the obligation, to purchase within a specified period, while the optionor (seller) is bound if the option is exercised. This is unilateral because only the seller is obligated once the option is granted; the buyer can choose whether to perform.
Why the other options are wrong
- A. An open listing involves multiple brokers competing for a commission, unrelated to purchase rights.
- C. A right of first refusal only requires the holder to match an offer if the owner decides to sell, not a fixed guaranteed right to buy anytime.
- D. A bilateral agreement requires mutual obligations on both parties to perform.
Option Contract
An option contract grants the optionee the right, but not the obligation, to purchase property at agreed terms within a set time, in exchange for consideration paid to the optionor.
- Optionor is bound; optionee is not obligated to perform
- Requires separate consideration to be binding
- Must meet Statute of Frauds requirements (in writing)
- Different from a right of first refusal, which is contingent on the owner deciding to sell
Memory trick: Option = 'One-sided lock'—only the buyer holds the key to decide.