Sec. 351. Options On Real Estate

We have already discussed the broker's status when he procures an option.4 A general idea of the nature of an option is, however, not without value. An option on real estate is an exclusive privilege to buy such real estate, and a contract for an option, or option contract, is the agreement by which the privilege is created. It neither transfers nor agrees to transfer title to the property, but confers upon its holder the right, within the time limited by the option, to buy the property upon the terms provided.

* This discussion occurs in Sec. 149, 163 supra.

The option is a one-sided agreement, not binding on the holder until accepted by him, but the moment the holder or the proposed purchaser accepts the option, both parties are bound - the owner to sell, and the purchaser to buy. The acceptance of the option may be in writing, or by mere assent, or by tender of the price.

The term "acceptance" as used in connection with an option must be understood. The mere physical "receiving" of the written offer which constitutes the option is not an "acceptance." An assent to the offer contained in the option is necessary to constitute an acceptance.

An option, unless founded upon a consideration, may be revoked or withdrawn at any time before acceptance, and it has been held that a sale of the property to another party amounts to a withdrawal. It is essential, too, that the option shall be in writing and be signed by the vendor.

Sec. 352. Essential Features Of A Contract For Sale Of Real Property

The essentials of a valid contract for the sale or exchange of real property are the same as for any other contract, with the added requirement that it must be in writing and be signed by the vendor. No particular words are necessary. A contract is sufficient if it gives the names of the seller and the buyer, and expresses the consideration and describes the land to be conveyed. The agreement must be mutual - binding upon both parties. In most states no seal is required.

The books abound with cases in which the courts have passed on various writings and have either sustained or rejected them as contracts. Some authorities say that the contract may be made up of several writings, even if some of the writings are addressed to a third party, that it need be signed only by the seller and that the land may even be identified orally. Others say that the paper should state the whole contract with reasonable certainty so that the substance of it may be made to appear from the record itself without resort to any oral evidence. But all this uncertainty arises usually by reason of the parties trusting to informal writings or mere "receipts" and would not arise if formal agreements, blanks for which are almost everywhere obtainable, were entered into.

Sec. 353. Parties To The Contract

In contracts relating to the sale of real estate, as in any other contracts, there must always be two parties. The parties must be capable of contracting. Usually infants or persons of unsound mind cannot contract. Application to the courts is necessary in such cases and also in the case of certain corporations whose objects are religious, charitable and the like. The law in some states imposes on married women limitations in respect to their right to make contracts.

The owner of the property may make the contract in his own name as vendor, but in all cases it is advisable if he is married, to have his wife join in the contract as this often avoids troublesome complications later. In some states the husband must join in a contract made by the wife for the sale of her real property.

The right of an alien to make a contract for the sale of real property is another of those questions concerning which much may be said. It is a matter of local regulation, but in modern times the rights of aliens with respect to real estate have been so much enlarged that they may contract practically without limitation.

A person may make a contract to sell property even though he does not own it, but if he fails thereafter to acquire the title or to procure a conveyance in accordance with his contract, he subjects himself to damages.

Business corporations are competent to make contracts for the sale of realty. The rights of executors, trustees, administrators and guardians to make such contracts present further questions. An executor or trustee who is given power of sale under a will, may usually sell without application to the court. And so may an "administrator with the will annexed," who succeeds to the executor's power of sale. Otherwise application to the court is necessary and reasons for sale must usually be shown. Where there is any doubt as to whether application to the court is necessary, it is always advisable to insert in the contract that the sale is "subject to the approval of the court," and this affords at least some protection in some cases.