Barney Fletcher Practice Exam

In the option agreement described, which statement about the sale price is correct?

The buyer is guaranteed a fixed price when the option is signed The sale price would be determined when the option is exercised The buyer can purchase the property by matching any other offer The optionor is obligated to pay the sale price when the option is exercised

Correct Answer:

The buyer is guaranteed a fixed price when the option is signed

Explanation:

In an option agreement, the price is set and fixed within the contract when the option is created. This gives the buyer certainty: if they choose to exercise the option later, they will purchase the property at that pre‑agreed price, regardless of any later market changes. The seller is obligated to convey the property at that fixed price when the option is exercised, while the buyer is the one who pays that price. There’s no requirement to match other offers unless the contract specifically includes such a provision, and the seller does not pay the sale price—the buyer does. So the statement that the buyer is guaranteed a fixed price when the option is signed best captures how the sale price is set in this type of agreement.

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