Sj900 0 Report post Posted June 13, 2012 I am a little confused on how to write the "Option Consideration" on the Option to Purchase Agreement and Assignment of agreements. For Example:If the Option Consideration I'm collecting from the buyer is $4,000 and I am giving the seller $1,500 of it. Does that mean I Put $1,500 on #3 in the Option to purchase agreement and $2,500 on the assignment of agreements? or Do I put $1 on #3 of the Option to purchase Agreement and $4,000 on the Assignment of agreements. If I do it this way, how is it documented that the seller received $1,500? At first I believed you would put $1,500 on #3 to show that you what you were giving the seller and put $4,000 on the Assignment of agreements. But in my mind that reads there would be $5,500 (4,000 + 1,500) in option considerations. I'm totally confused, I just want to know how to write it and explain it to the seller so that it makes since Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 14, 2012 The Option to Purchase Agreement is between you and the homeowner. Therefore, that agreement should reflect the amount you are giving to the homeowner, let's say one dollar or five.The CA Assignment Agreement reflects the amount of the assignment fee that the t/b is giving you and that also doubles as option consideration. Share this post Link to post Share on other sites
ErikOk 10 Report post Posted June 14, 2012 The Option to Purchase Agreement is between you and the homeowner. Therefore, that agreement should reflect the amount you are giving to the homeowner, let's say one dollar or five.The CA Assignment Agreement reflects the amount of the assignment fee that the t/b is giving you and that also doubles as option consideration. Plus on the CA, the option consideration is not considered part of a down payment, right? The assignment (option consideration) only reduces the sale price of the property. The buyer will still have to come up with whatever percentage down payment the lender requires. Share this post Link to post Share on other sites
pilot76180 51 Report post Posted June 14, 2012 It depends on your doc...my docs show the option fee as being applied towards the down payment. Otherwise, the buyer has to start from scratch at finance time. Share this post Link to post Share on other sites
ErikOk 10 Report post Posted June 14, 2012 It depends on your doc...my docs show the option fee as being applied towards the down payment.Otherwise, the buyer has to start from scratch at finance time. John, After seeing your comment, I remembered you posting something about this in a previous post. I can't find that info, so can you please give an example of the wording for how the doc shows the option fee as being applied towards the down payment. I agree it would seem like a raw deal for the buyer to not get some sort of credit towards the down payment. How is that handled though when you are receiving the option money in your company name, but the seller must credit it to the buyer at close? How is it written and where? PS I promise to print out your response & bookmark your post so you don't have to repeat it in a month. Share this post Link to post Share on other sites
Sj900 0 Report post Posted June 14, 2012 To make sure I understand MC: If I agreed to give the seller 1,500 of the 4,000 I receive from the tenant buyer, I would put 1,500 for option consideration on the Option to Purchase agreement and 4,000 on the assignment of agreements because thats what the T/b is paying as Option Consideration? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted June 14, 2012 To make sure I understand MC: If I agreed to give the seller 1,500 of the 4,000 I receive from the tenant buyer, I would put 1,500 for option consideration on the Option to Purchase agreement and 4,000 on the assignment of agreements because thats what the T/b is paying as Option Consideration? No. The Option to Purchase Agreement only reflects the amount of option consideration you gave to the homeowner at the time the deal is consummated. As I said above, that's usually a buck or so to make the option legally binding.The CA Assignment Agreement shows the amount of assignment fee the t/b paid you. As per that document, the assignment fee also doubles as option consideration and is applied as a credit towards the purchase price of the property. Ideally, you are going to keep all of that money. However, if you agreed to pay the homeowner some amount, then ask the t/b to bring separate cashiers checks or money orders to reflect that. It isn't noted anywhere specifically that you are sharing your money with the homeowner. If the homeowner wants something in writing you can always add a note on the agreement. Not a big deal. Share this post Link to post Share on other sites
Sj900 0 Report post Posted June 14, 2012 Thank you MC. I can see clearly now! Share this post Link to post Share on other sites
