What is TRUE regarding an option agreement?

An option agreement is a legally binding contract that provides the buyer the exclusive right to purchase a property at a predetermined price within a specified timeframe. This structure allows the seller to secure a buyer while granting the buyer the flexibility to make a purchasing decision later without committing immediately.

The focus on the seller agreeing to sell at a fixed price within a stipulated time is key to understanding the nature of an option agreement. Essentially, this means that the seller is conveying a commitment to sell the property under set terms, creating a sense of security for the buyer, who has the opportunity to evaluate the property or market conditions before making a final decision.

Other statements do not accurately reflect the core nature of an option agreement. For instance, the implication that the buyer must purchase the property at some future time does not recognize the optional nature of the agreement— the buyer is not obligated to buy if they choose not to exercise the option. Similarly, while the buyer may have certain rights related to occupancy or payments, these aspects do not represent the fundamental definition of an option agreement. In essence, it is the seller's commitment to sell at the predetermined price that encapsulates what is true regarding option agreements.