Contracts
What is an 'option contract' in Hawaii real estate?
AA. A contract requiring both buyer and seller to complete the transaction
BB. A contract giving the buyer the right (but not obligation) to purchase property at a set price within a specified time, in exchange for consideration✓ Correct
CC. A lease with a right of first refusal
DD. A developer's right to delay a construction contract
Explanation
An option contract is a unilateral contract giving the optionee (buyer) the right to purchase property at a specified price during the option period. The optionor (seller) is bound to sell if the buyer exercises the option, but the buyer is not obligated to buy.
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Key Terms to Know
Option Contract
A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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