Martha gave Hannah the right to purchase her vacant lot for $65,000. Hannah paid Martha $1,200 for this right. Hannah is the:

• A. Optionor
• B. Vendee
• C. Optionee
• D. Lessee

Answer: (C)

The concept being tested is an option contract in real estate. An option gives one party (the optionor) the right to sell a property to another party (the optionee) at a set price within a specified time, in exchange for a premium paid upfront. In this scenario, Martha grants Hannah the right to purchase the lot for 65,000 and Hannah pays 1,200 for that right. Because Hannah is the holder of the option who has the right, but not the obligation, to buy, she is the optionee. If she exercises the option, she would become the vendee in the eventual sale at the agreed price; if she does not exercise, there is no purchase. The term vendee applies to someone who buys under a standard sale contract, which is not the situation here until the option is exercised, and lessee refers to someone who holds a lease, which is not relevant to an option agreement.