Maryland Home Improvement PSI Practice Exam

A contract obliging sellers to convey title if buyers pay $22,000 by a deadline is called what?

1. A buy-sell agreement

2. An option contract

3. An installment contract

4. A vendor's lien interest

The correct answer is: An option contract

An option contract is a specific type of agreement wherein one party grants another the right to purchase a property at a predetermined price within a specific timeframe. This means that the sellers are obligated to convey title if the buyers fulfill their payment obligation within the set deadline. In this scenario, the contract focuses on the buyers’ ability to complete the purchase by paying the agreed amount ($22,000) by a certain date. If the buyers choose to exercise this option, the sellers cannot refuse to transfer the title. Buy-sell agreements typically outline the terms of sale between the parties but do not specifically grant an exclusive right to purchase. An installment contract involves a series of payments rather than a single deadline payment. A vendor's lien interest refers to a legal claim that a seller has on a property until they are paid, which does not directly relate to the scenario described in the question. Hence, the option contract accurately represents the type of agreement in which the buyer's payment is contingent on the seller's obligation to convey the title.