Discuss Real Estate Licensing Maryland-Real-Estate-Salesperson Exam Topic 6 Question 16

Shelly buys Mark's house, which is still in an option period with Monique. Monique decides to exercise her option after Shelly moves in. What will happen?

AMark will have to refund Monique's option fee.

BNothing will happen, as long as Shelly has a fully executed sales contract with Mark.

CShelly and Mark must form a new option agreement.

DShelly will have to sell the house to Monique.

Suggested Answer: D

Comprehensive and Detailed Explanation From Exact Extract of Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course:

An option contract gives the optionee (Monique) the exclusive right to purchase a property within a specified period and under specific terms, but not the obligation to do so.

When properly executed and supported by consideration (the option fee), the option is a binding contract on the property owner (Mark) and any subsequent owners who take title with constructive notice of the existing option.

Therefore, when Monique exercises her valid option within the option period, Shelly must honor it---the property must be sold to Monique under the agreed terms.

Maryland 60-Hour Principles and Practices of Real Estate Pre-Licensing Course -- ''Real Estate Contracts'' Module

Maryland Contract Law Principles -- Option Contracts and Specific Performance.

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12 comments · newest first

Samira 2 months ago

C makes sense too. New agreements can happen if options are exercised.

Lonny 2 months ago

I disagree. A is possible. Mark might need to refund Monique.

Detra 2 months ago

I think it's B. Shelly has a contract, so Monique can't do anything.

Adrianna 2 months ago

Totally agree with B), no way Shelly loses the house!

Shawn 2 months ago

C) makes sense, they need a new agreement.

Ashlee 2 months ago

Wait, can Monique really exercise her option after the sale?

Lore 3 months ago

I think B) is correct. Shelly's contract protects her.

Sharee 3 months ago

A) Mark will have to refund Monique's option fee.

Samira 3 months ago

I feel like this situation could get complicated. I don't think Shelly would have to sell to Monique, but I’m not sure what happens to the option fee.

Moon 3 months ago

This kind of reminds me of a practice question we did about options and contracts. I think the answer could be B, but I'm not completely confident.

Evelynn 3 months ago

I'm not entirely sure, but I feel like if Shelly has a solid contract with Mark, it might protect her from Monique's option.

Kizzy 4 months ago

I think I remember that an option period gives the buyer the right to purchase, so maybe Monique can still exercise her option?

Real Estate Licensing Maryland-Real-Estate-Salesperson Exam - Topic 6 Question 16 Discussion