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The forums have been archived and are now read only.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
DanielSun

an option locks up the property or not?

Recommended Posts

My understanding is that if the seller agrees to do lease purchase, then I get him to sign an option to me, then I have say, 90 days to find a TB, during which time i have exclusive right to purchase the property, if i don't find a TB then the option expires.

 

 

I read from another guru, (first name "ron") who says sometimes he puts in an agreement with the seller, that if the seller find a buyer before the investor does, then the option is cancelled. this does sound nice and reassuring to the seller. Doesn't that weakens our position? this allows our TB to go around us to deal directly with the seller.

 

I wonder who else uses this approach and knows the answer to this.

Share this post


Link to post
Share on other sites

I believe this is considered a non-exclusive option to purchase.

Share this post


Link to post
Share on other sites

Hi DanielSun,

Charles is right the kind of contract you are describing is a non exclusive. It seems to me that if we are keeping track of all our potential t/bs or as our great leader Michael would say---keep control of the deal----we will know if someone has gone around us.I think staying close to our t/bs and the sellers presenting ourselves as super important to the success of the transaction helps too.

 

It may seem kind of nonchalant to say that if we lose out on a deal it's money we would never had anyway before the deal. And the experience gained is sometimes worth more than the money. By doing this kind of thinking I keep myself from getting too overly attached to stuff and suffering anxiety attacks :P

Share this post


Link to post
Share on other sites

Hi, Daniel, and welcome to The Naked Investor. Glad you found us.

 

My understanding is that if the seller agrees to do lease purchase, then I get him to sign an option to me, then I have say, 90 days to find a TB, during which time i have exclusive right to purchase the property, if i don't find a TB then the option expires.

That depends on the type of lease purchase deal you are doing. For example, if you are doing a sandwich lease then it isn't going to be non-exclusive. You have a signed agreement with the homeowner. . .the deal is done.

If you are doing a Cooperative Assignment you can go either way regarding exclusivity. Preferably exclusive, since you want to do the deal and make your money for your efforts. In some deals the homeowner will only accept a non-exclusive approach. Ultimately, it comes down to whether or not you want to accept those terms.

Likewise, a Pure Option is most likely going to require a non-exclusive approach because the homeowner wants to sell and won't want to count solely on your efforts to do so.

Share this post


Link to post
Share on other sites

Does anyone have an example of what you add to a contract to make it non-exclusive? I haven't seen anything anywhere, and I have forms from pretty much everyone, lol. Have been wanting to add this, especially for properties that I might not be able to find a buyer, having something set where the owner and I know that we are taking a chance would be a great thing, with an exit clause, lol.

 

I.E. I have 60 days to find a buyer until the contract goes into effect, at which time if a buyer has not been found the contract ends. (All while still being assignable. I can't think of a way to add it, it might be all this snow.)

Share this post


Link to post
Share on other sites

mhmi, depending upon the type of deal you are doing, a CYA clause is already in place. For example, when doing a Cooperative Assignment, my agreements allow you to cancel at anytime prior to the lease start date without any penalty or problem. Can you give some specifics?

Share this post


Link to post
Share on other sites

Yea, I just hate the "cancel" concept, but I think I found something in one form I have, and also this thread: Guess I just needed something worded more sweetly, lol, I don't like calling someone and saying I'm going to cancel the contract, I'd rather push it up front that we will only give them 30-60, or whatever, days and if it's not going, well, something is wrong, but we tried. Gives me more room to renegotiate I think and doesn't so much make me the bad guy. Mostly I just need it when I have an expensive property kind of in the middle of nowhere.

Share this post


Link to post
Share on other sites

Yeah, it's pretty standard to have the non-exclusive clause in there for assigning a lease option. I used Joe Crump's 1 page doc for a while with a simple clause saying it's non-exclusive (saying the seller has the right to keep looking for a tenant or a buyer or whatever) & if we can't find a T. buyer within 90 days, the contract is dead.

 

That's the basic idea. I started adding a separate form later that I would have the seller sign saying any T buyers I bring through my efforts are mine & are exclusive to me & any they have are exclusive to them (so it's fair). I also put on that form the clause to keep all the buyers credit info confidential before I give that to the seller.

 

That way everyone feels protected.

 

JvM

Share this post


Link to post
Share on other sites

×
×
  • Create New...