The quick answer is cash it and keep it. The Seller earns this money when the contract is executed. It is a payment from Buyer to Seller for the unrestricted right to terminate the contract during the Option Period. If you receive a check, make sure you cash it. The lender might require proof that the check has been cashed and hold up closing.
Option Fee money is often confused with Earnest Money. Earnest Money is a deposit held in Escrow to be applied towards the purchase of the home. An Option Fee is 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 closing. It doesn’t have to be the same dollar bill. It’s yours no matter what happens.
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