What is an option contract?

An option contract is correctly defined as a right to buy a property during a specified period. This means that the buyer (optionee) holds the exclusive right to purchase the property at a predetermined price within a certain timeframe. This kind of contract does not create an obligation to purchase the property; it simply grants the optionee the choice to execute the purchase if they decide to do so. This flexibility is a key characteristic of option contracts, making them valuable tools in real estate negotiations.

Other choices describe different concepts: a requirement to buy a property at a specific price suggests an obligation that is not present in an option contract, as it merely provides a choice rather than a requirement. A promise to sell property without conditions indicates a binding agreement but lacks the flexibility of the option to not proceed with the sale. Finally, a termination of existing contracts refers to ending a contract rather than establishing a new right to purchase, which is unrelated to the nature of an option contract.