Jump to content
The forums have been archived and are now read only. Years of great info saved for your reading pleasure. Thank you! Visit us on Facebook: https://www.facebook.com/NakedInvestor/ ×
The Naked Investor Forums
dan332

Option to cancel

Recommended Posts

I just had a potential seller tell me that they would like the option to cancel on the TB during the LO if they found a straight buyer. I told them that the only way I could think of that it could "possibly" be worked out would be if they agreed to pay the TB a cancellation fee written into the contract up front.

 

Any problems with this?

 

-Dan

Share this post


Link to post
Share on other sites

Well that's not very nice! Hold out the carrot and then beat them with the stick when they're just about to buy.

 

You might be able to get away with it by having a cancellation fee like you suggest, but do you really want to develop the reputation of putting together deals that allow the seller to rip the buyer off like that? Doesn't seem wise for the long-term health of your business.

Share this post


Link to post
Share on other sites
I just had a potential seller tell me that they would like the option to cancel on the TB during the LO if they found a straight buyer. I told them that the only way I could think of that it could "possibly" be worked out would be if they agreed to pay the TB a cancellation fee written into the contract up front.

 

Any problems with this?

 

-Dan

Many. It's probably illegal. It opens up the possibility of all sorts of lawsuits, I'm sure. It changes the entire deal. To the point where I don't see it being possible that you could ever get a potential t/b to agree to such terms and put down any option money. Which lead to this question: how would you get paid?

Share this post


Link to post
Share on other sites

I was thinking that the upfront agreement would be that the owner would return the option money FROM THEIR OWN POCKET, plus a sufficient penalty paid to the TBs on top of that to make up for the inconvenience. As long as both parties agree upfront to it, I dont see anything unethical. However, the owner just sent me an email suggesting that the penalty be one month free rent, which in my mind is not nearly enough compensation for a TB to even bother. I was thinking more like a 5K penalty plus the return of option money (coming from the owner, not me)

Share this post


Link to post
Share on other sites

man stay away from that kind of deal. Sellers and Buyers have very short term memory. All the CYA documents are good but when you get in front of a judge and trying to explain what took place you will have a hornets nest. What about the TV station camping outside your door and such.

 

Just make a clean deal and go skin another cat.

Share this post


Link to post
Share on other sites

Dan- Do you already have a tb in the property? If so then I would agree with everyone here that its a bad idea to have the option to cancel...On the other had if you do not have a tb in the property I would suggest to the owners that you will market for both the out right sale and Lease option. Then take which ever comes first.

Share this post


Link to post
Share on other sites

Dan, what Rex said. This deal is way too much trouble. And I'd hate to see you doing the Perp-walk on the Six O'Clock News. . .post-1-1192465320.jpg

Share this post


Link to post
Share on other sites

What the deal is, is that he is now renting out month to month furnished because he wants to keep his straight sale options open. He'll just boot out the month to month when he has a buyer.

 

::o) I thought it was pretty straightforward with a cancellation clause but after reading these words of caution I wont touch this with a 10 foot pole.

 

Thanks for the heads up guys. I have enough worries and dont need to lose sleep worrying about getting slapped with a lawsuit!

Share this post


Link to post
Share on other sites

×
×
  • Create New...