medium · National Real Estate Exam contracts
A contract for an option to purchase real estate requires the optionee to provide 'option money' to the optionor.
How does this differ from earnest money in a standard purchase agreement?
- Option money is the consideration for the option contract, while earnest money is a good-faith deposit.
- Earnest money is always fully non-refundable, while option money is always fully refundable.
- Option money must equal at least ten percent of the sale price, while earnest money can be any agreed amount.
- Earnest money creates a unilateral contract binding only the buyer; option money instead creates a bilateral contract.
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