What do I do with the option fee check?

The quick answer is cash it and keep it. The seller earns this money at contract execution. It is a payment from the buyer to the seller for the unrestricted right to terminate the contract during the Option PeriodAn option period is a specified time frame in a real estate contract which allows a buyer to terminate the contract for any reason. It creates the right to terminate within the specified number of days for a specified price. Usually the first 5-10 days of the contract. During the option period, a buyer inspects the home for material defects. …. Option feeA payment from the buyer to the seller for the unrestricted right to terminate the contract during the Option Period…. money is often confused with earnest money. Earnest money is a deposit held in escrowAn item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon… and applied towards the purchase of the home. An option fee is a compensation earned by the seller for giving the buyer the freedom to terminate and dismiss all obligations.

The contract may say it is credited to the buyer at closingThe process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions. See…. It’s yours no matter what happens.