PSI New Jersey Real Estate State Practice Exam

What type of contract allows Seller A to exclusively offer a price for a specific time period to Buyer B?

1. Mutual contract

2. Option contract

3. Purchase agreement

4. Lease agreement

The correct answer is: Option contract

An option contract is designed specifically to grant one party, in this case, Seller A, the right but not the obligation to sell property at a predetermined price within a specific time frame to another party, Buyer B. This kind of contract creates a binding agreement where the seller cannot accept other offers during the option period, effectively giving Buyer B exclusive purchasing rights. This structure is particularly useful in real estate transactions when the buyer needs time to evaluate the property or secure financing. In contrast, a mutual contract typically refers to agreements where both parties have obligations, but it does not specifically set an exclusive offer for a period. A purchase agreement is generally used once the buyer has decided to buy the property and encompasses the terms of the sale, not the exclusivity of an offer. Lastly, a lease agreement pertains to the rental of property and does not involve the sale or exclusivity of a sale price. Therefore, the option contract is the correct choice as it aligns perfectly with the requirement of securing a specific offer for a designated period.