Is it possible for an option contract to be valid without any option money?

• A. Yes
• B. No
• C. Only in commercial properties
• D. Only if the optionee is licensed

Answer: (A)

The concept being tested is that a real estate option contract must have consideration, but that consideration doesn’t have to be cash paid as option money. Consideration is something of value exchanged between the parties, and it can take forms other than money. So an option can be valid even if no option money is paid, as long as the grant of the option is supported by some other form of value agreed upon by both sides (for example, a promise to perform a service, or another form of noncash consideration). This means the option is enforceable during the specified period because the essential element—something of value being exchanged—exists.

That’s why it isn’t limited to commercial properties or to optionees who are licensed; those conditions aren’t required for validity. The key idea is the presence of valid consideration, not the mere presence of cash.