Question
nnnnA cautious buyer paid $200 for a four-month option to purchase a property for $30,000. Under these circumstances, each of the following are true except:
nnnnSelections
nnnnA. Optionee has given adequate consideration
nnnnB. Optionee has created a legal interest in the property
nnnnC. Optionor’s temporary surrender of right to sell is “valuable” consideration
nnnnD. The agreement imposes no obligation on the optionee to purchase the property
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Answer: B
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5 Keys Summary
nnnn• Optionee has not created a legal interest in the property because an option grants a contractual right to purchase, but it does not convey actual legal title or immediate ownership interests in the real property itself.
nnnn• During the option period, the optionee (buyer) typically has no right to possession or use of the property.
nnnn• The agreement imposes no obligation on the optionee to purchase the property, as an option is a unilateral contract that grants a right without the obligation to buy.
nnnn• The $200 paid constitutes adequate consideration because consideration for an option does not need to be a large amount; it must only be legally sufficient, and a nominal amount is acceptable.
nnnn• The optionor’s temporary surrender of the right to sell is valuable consideration, as the seller is obligated to hold the option open and cannot sell the property to any other buyer during the designated period.
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