A buyer wants to buy a parcel of land but only if zoning changes; he can place a $10,000 deposit on the purchase agreement subject to obtaining a change in zoning or purchase a 90-day option by paying a $10,000 option fee. Which of the following is true regarding the buyer's choices?

• A. He loses his option unless he exercises it before the expiration of the 90-day period.
• B. He automatically obtains the zoning change.
• C. The deposit is refundable regardless.
• D. The option expires after 30 days.

Answer: (A)

A real estate option gives the buyer a time-limited, exclusive right to purchase a property. The option fee pays for that exclusive period, and the option remains in force only if the buyer exercises the right within the specified time frame. If the buyer does not exercise the option before the expiration, the option ends and the right to buy lapses; the option fee is typically not refunded.

In this scenario, choosing the 90-day option means you have 90 days to decide whether to buy. If you don’t act within those 90 days, the option expires and you lose the option. The zoning-contingent purchase, by contrast, hinges on the zoning change occurring; if the change doesn’t happen, you can walk away under the contingency, and the deposit is usually refundable under that agreement.

Also note, the option period is 90 days, not 30 days, and a zoning change is not automatic.