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contract contains a provision stating that all the terms of the contract are binding upon the heirs, executors,
administrators, and the assigns of the respective parties.
With this provision, the buyer’s rights are the same against the heirs, executors, administrators, or assigns of the
seller as the buyer had against the seller. Under these circumstances, the buyer may compel specific
performance of the contract by the seller’s heirs, administrators, executors, or assigns.
Uniform Vendor and Purchaser Risk Act (Civil Code Section 1662). In some circumstances, after a contract
is made for the purchase and sale of real property, a fire or other disaster destroys or seriously damages the
property. The question becomes who shall take the loss? Under California’s Uniform Vendor and Purchaser
Risk Act, any contract made in this state for the purchase and sale of real property shall be interpreted as
including an agreement that the parties shall have the following rights and duties unless the contract expressly
provides otherwise:
1. If, when neither the legal title nor the possession of the subject matter of the contract has been transferred,
and all or a material part thereof is destroyed without fault of the purchaser or is taken by eminent domain,
the seller cannot enforce the contract, and the purchaser is entitled to recover any portion of the price paid;
2. If, either the legal title or the possession of the subject matter of the contract has been transferred, and all or
any part thereof is destroyed without fault of the seller or is taken by eminent domain, the purchaser is not
relieved from a duty to pay the price, nor entitled to recover any portion thereof that has been paid.
Options
Since an option is a form of contract, the requirements for the enforceability of real estate contracts apply to
options. Some consideration, even though it might be only 25¢ on a $100,000 parcel of real estate, must in fact
pass from optionee to optionor. A mere recital of consideration alone is insufficient. Provisions of a lease,
however, constitute sufficient consideration to support an option contained in the lease. Option contracts
typically run from seller to buyer. That is, in exchange for consideration paid by the buyer, the seller is deprived
of the right and power to revoke the basic offer to sell. The buyer, in effect, purchases an agreed amount of time
in which to accept or reject the seller’s underlying offer concerning the property. Thus, the underlying offer is
rendered irrevocable for the period specified in the collateral option contract.
Although option rights are usually assignable unless there is a restriction to the contrary, they do not give the
optionee any interest in the land. For this reason, the optionee cannot mortgage his or her rights. However, the
holder of an unexercised option does, however, have an interest for which the holder may be entitled to
compensation upon condemnation of the land.
The option may be given either alone or in connection with the lease of the property. It may be in either the
customary form of an exclusive right to purchase or lease, or in the form of a privilege of first right of refusal to
purchase or lease. The option will terminate automatically upon expiration of the time specified without
exercise by the optionee. Additionally, the termination of a lease containing an option also usually terminates
the option. A renewal of the lease may, however, renew the option. The specific lease situation must sometimes
be carefully examined, since the option provisions and the lease provisions may be divisible.
An option to purchase real property is a written agreement whereby the owner of real property agrees with the
prospective buyer, that such buyer shall have the right to purchase the property from the owner at a fixed price
within a certain time. Terms of financing, payments, etc., should be set forth in such agreement. The
prospective buyer at buyer’s option may comply with all the terms of the agreement or be relieved from its
terms. The owner would not have recourse to any legal procedures for damages or specific performance. The
option does not bind the optionee to any performance. It merely gives the optionee a right to demand
performance. Time is of the essence in an option and is usually strictly construed. If no time is specified, a
reasonable time period is implied.
If an option is recorded by the optionee, but is not exercised before or on the date of the expiration of the option,
the optionee should remove the effect of the option from the records by recording a quitclaim deed.
The broker usually does not earn a commission for having secured a client who takes an option, as the broker’s
right of commission does not arise unless the option is exercised.