Court Invalidates Purchase Agreement as Option Lacking Consideration
In Steiner v. Thexton (2008) 163 Cal. App 4th 359, the California Court of Appeal for the Third Appellate district found that a document entitled “Real Estate Purchase Contract” did not, in fact, constitute an agreement for the purchase and sale of real property, but, rather, constituted an option. The court further held that since the option lacked consideration, it constituted nothing more than an ongoing offer of the seller to sell the property, which could be withdrawn at any time prior to its acceptance or exercise.
The case has significant implications for agreements for the purchase and sale of real property, particularly with respect to transactions involving longer contingency periods to obtain land use approvals, and, potentially, for agreements containing typical discretionary due diligence periods.
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