Question regarding CAs

[bpmiller2 0]

I am having a hard time figuring out how to properly structure a CA. If I have agreed with the seller on a PP of $205,000, Rent $1400 with a $200 RC, OC of $3500, and a 12 month term........now if my net PP is $205,000 do I put on the contract a gross PP of $207,400 to reflect the $2400 in rent credits, or do I need to set my gross PP $210,900 to include both rent credits and option consideration. And just to clarify, when marketing for a TB, I am using the gross PP reflected on the contract.....right?

[MichaelC 160]

To the net purchase price you have promised the seller, ($205K), you will add the rent credits and the anticipated option money you will be keeping. In your example, that means a gross purchase price to the t/b of $210,900. And, yes, your marketing would reflect the gross price.

[Jason (AL) 1]

I am having a hard time figuring out how to properly structure a CA. If I have agreed with the seller on a PP of $205,000, Rent $1400 with a $200 RC, OC of $3500, and a 12 month term........now if my net PP is $205,000 do I put on the contract a gross PP of $207,400 to reflect the $2400 in rent credits, or do I need to set my gross PP $210,900 to include both rent credits and option consideration. And just to clarify, when marketing for a TB, I am using the gross PP reflected on the contract.....right?

 

 

Hey Miller,

 

If your seller is wanting to net $205,000 when the smoke clears, then you add the rent credits & the OC

to that.

In your case, you'll be offering it to your T/B at a price of $210,900.

You need to set it at this amount to cover the rent credits ($2400) and your profit ($3500).

 

If you're using Michael's Option to Purchase Agreement, then it will stipulate this

in line 1c and 1d.

Note in line 1c, it says:"...less any designated option money and rent credit."

[bpmiller2 0]

Thanks MC and Jason for the reply. Just to clarify, I will put the purchase price of $210,900 in line 1.c and then my RC and OC will go in line 1.d and that will reflect the net price that my seller will get....correct?

 

Sorry for getting so techincal.....I know I am overthinking the whole thing!

[MichaelC 160]

Thanks MC and Jason for the reply. Just to clarify, I will put the purchase price of $210,900 in line 1.c and then my RC and OC will go in line 1.d and that will reflect the net price that my seller will get....correct?

 

Sorry for getting so techincal.....I know I am overthinking the whole thing!

Close. . .but not quite. Yes, the full purchase price, (in this case, $210,900), goes in line 1C, and the rent credits are shown in line 1D. But the option consideration in Paragraph should reflect what you are giving to the homeowner, which should be a buck or five and nothing more. The option consideration you receive from the t/b would show up in the CA Assignment Agreement, and wraps up the required paperwork.