Contracts
What is an 'option contract' in Illinois real estate?
AA contract that gives a buyer the exclusive right to purchase a property within a specified time at a set price, for consideration paid to the seller✓ Correct
BA contract allowing either party to cancel without penalty
CA lease with a clause allowing renewal at the tenant's option
DA contract requiring the seller to accept any reasonable offer
Explanation
An option contract in real estate gives the buyer (optionee) the exclusive right—but not the obligation—to purchase a specified property at a predetermined price within a defined period. The buyer pays consideration (option money) to the seller (optionor) for this right.
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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.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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