PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM GLOSSARY
An option contract gives the optionee the right, but not the obligation, to buy or lease property on stated terms within a stated time, in exchange for consideration supporting that promise.
Contracts
Contract formation
Define, distinguish, apply, retrieve
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PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEBuild the complete exam definition
Learn the rule, separate it from the nearest distractor, then apply it to a Georgia fact pattern.
What does Option contract mean?
An option contract gives the optionee the right, but not the obligation, to buy or lease property on stated terms within a stated time, in exchange for consideration supporting that promise.
How do you separate the nearest exam answer?
Before exercise, the optionor is bound to keep the opportunity open while the optionee is not bound to purchase. A bilateral purchase contract binds both sides to promises.
What changes or stays the same in Georgia?
Georgia contract principles and the statute of frauds apply to real estate options. The written terms should identify the property, option period, consideration, and exercise method.
An owner accepts $2,000 to keep a $250,000 purchase opportunity open for 30 days. The prospective buyer may exercise on time or let it expire.
Option consideration and earnest money serve different functions. Do not assume an unexercised option is already a purchase contract.
PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDERetrieve the rule under exam conditions
Answer before reading the explanation. Then explain why every distractor belongs to a different term.
A buyer pays an owner $3,000 for the right to buy a lot for $180,000 at any time in the next 60 days. Two weeks later, which statement best describes the parties' positions?
- A
Both are bound to close, as in a purchase contract
- B
The owner may sell to someone else with notice
- C
The buyer must buy or owe the owner damages
- D
The owner is bound; the buyer may buy or let it lapse
In an option, the optionor is bound to keep the offer open for the option period in exchange for the consideration paid. The optionee has the right but not the obligation to buy. Until exercise it is not a bilateral purchase contract, and the $3,000 is option consideration, not earnest money.
Mark each box only when you can perform the skill without looking.
I can define the term in one precise sentence.
I can separate it from the closest look-alike.
I can explain the Georgia rule or confirm that the national rule applies.
I can answer the practice check and explain every option.
PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEConnect the term to the wider exam
Use these relationships to move from isolated recall to a connected exam model.
Contracts complete lesson
https://www.passgeorgiarealestate.com/study-guide/contracts/options-and-first-refusal
Official exam administration and content-outline source.
https://test-takers.psiexams.com/api/content/bulletin/4672State-authorized public access to current Georgia statutes, including Title 44 property law.
https://www.lexisnexis.com/hottopics/gacode/Default.asp