LandInvestors.com Forums **Ask A Question** Is the Option Consideration deposit needed for the contract to be valid ?

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    john
    Participant
    Post count: 12

    I am about to sign an “option agreement for purchase of vacant land” in California
    The seller has accepted $ 10.00 as the option consideration.
    1. Would the contract be valid without the consideration clause?
    2 How should I send the consideration money to have the proof it has been paid? It is a high price property and the seller may ignore depositing $10 check.

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  • Kevin Farrell
    Moderator
    Post count: 2093

    John – Usually the Option Consideration is a much larger, non-refundable amount that the seller can keep whether or not you sell the property. Depending on any other conditions in the contract, of course. In this case I would send the check for $10 to avoid any misunderstandings later.

    Kevin Farrell - Moderator
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    john
    Participant
    Post count: 12

    Thank you Kevin. My dilemma is not though whether to send a check or not but when I send the check and it remains not cashed ( because of such a small amount) I will not have any proof and it will make the contract not valid in the event California law requires the option consideration.

    Laurie Phillips
    Participant
    Post count: 211

    Hi John,

    There’s nothing you can do to make the seller deposit the check. If you’re concerned, ask if he/she will let you wire the money and offer to pay the wire fee that their bank charges them. It will at least triple the amount you’re spending on the option but it takes care of one worry for you.

    Good luck,
    Laurie

    john
    Participant
    Post count: 12

    Thank you Laurie for your time and the suggestions. I did not want to divert the already hesitant seller’s attention from signing the agreement itself and talk about a symbolic amount but important ONLY FOR ME $10 consideration.
    What I have eventually done, is sending the money using Paypal, just adding a note ” an option consideration”- has been accepted and I have the proof.
    Little later I’ve found the following on the lawyer’s site.
    “Without consideration, the seller could withdraw the offer without becoming legally liable for a breach of contract. If the consideration stated has value, like $10, it will be sufficient. This is true even if the value is minimal or clearly inadequate relative to the subject of the contract.”

    Thank you again
    John

    Steven Kish
    Participant
    Post count: 133

    every option deal I have done (typically when they use the counter offer line, and I am not willing to pay cash at the counter amount), I get them to agree to give me more time close using an option, and I do not send any option consideration (as a monetary amount, you can argue value in other ways ultimately). If they are not going to close they are not going to close, and fighting over $10 is not going to change anything. I have never had anyone refuse to close using this method. I do often do a double close when doing this, as the numbers have still turned out really good, good enough that I have a tendency to worry about whether the seller will want to close because of how much I am making.

    john
    Participant
    Post count: 12

    Thank you Steven for your reply. It seems I have not structured my question clearly enough.
    I don’t worry about the symbolic $10 consideration but if without it the contract is valid. In my case I have been hesitant to offer a ridiculous amount of $10 ( a high priced lot ) to the seller who has not been familiar with the options and attempting to explain it to him, what could in turn raise unnecessary suspicion and jeopardize already verbally accepted deal.
    The answer to my question I’ve found in a paragraph ( below) on a lawyer’s site after I had posed it on this forum and was graciously replied by a few of you.

    “Without consideration, the seller could withdraw the offer without becoming legally liable for a breach of contract. If the consideration stated has value, like $10, it will be sufficient. This is true even if the value is minimal or clearly inadequate relative to the subject of the contract.”

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