Pure Option Assignment Confusion

[Rich08 0]

I have done one pure option before where I have assigned the deal, got paid, and never even knew if it closed. However, on one I am doing now it is a little different. There is more money involved and I will not get paid until closing. The title company asked me to get a p&s agreement signed by the seller and end buyer with a note in an addendum saying I get paid the difference between the option price and actual purchase price. That gets real close to brokering without a license. Would it make more sense for me to get a purchase and sale agreement signed between the seller and me for the option price, assign that with a note in an addendum saying specifically how much the assignment fee is? Or am I making this to difficult and the option form and assignemt forms are all the title company actually needs?

 

Thanks

[MichaelC 160]

Rich, your confusion over this is understandable. There is no one way to do this correctly. Seems each locale, each title company, and each attorney will have their own preferences in how they want this type of transaction to be setup. Your first concern, obviously, is to protect your position in the deal. With that in mind, there have been a number of threads about this. A quick search found this one. Our resident expert on this, Jonathan Rexford, may come along with some advice for you, or you can try contacting him yourself.

[Doug Pretorius (ON) 9]

I'm certainly not an expert in pure option closings, but I don't think brokering without a license is on the radar as a legitimate concern. I mean you do have a signed option contract with the seller, right? So you're a principal, regardless of how the title company wants you to be paid.

 

If it makes you feel better you could always ask them if you can mention in the addendum that you are being paid the difference in exchange for cancelling your option with the seller.

[Jonathan RexfordFL 8]

Rich here you go.

 

You currently have an option. You get the seller to sign a release of option agreement for you and him so he can go into contract with end buyer. Seller signs contract with buyer. Make sure he signs it before then. I will attach an option release fee agreement to this later.

Option_release_agreement.doc

[Rich08 0]

Rich here you go.

 

You currently have an option. You get the seller to sign a release of option agreement for you and him so he can go into contract with end buyer. Seller signs contract with buyer. Make sure he signs it before then. I will attach an option release fee agreement to this later.

 

 

Thanks. That does seem like a nice easy, clean way of doing it.

[Brian - L.V. 0]

I will attach an option release fee agreement to this later.

 

Hi Jonathan, I was just wondering if you'd be able to attach that agreement. I'm possibly going to be releasing an option that I have on an SLO in the near future, so it would helpful. I appreciate it! Thanks!

 

 

I have an SLO that I'm thinking about releasing my option to generate some cash and because my option price is pretty near FMV now. What I'm thinking about doing is telling my buyer that I can lower her purchase price over $10k if she'd be willing to pay me a couple grand or so. Her option is up soon so she requested to extend it until the end of the year anyways. If she can't/won't do that, her net purchase price is at the top of FMV, so she may not be able to get financing for it without coming out of pocket for the difference.

 

I want to then contact the seller and let him know that my option is going to expire soon and with the way that the housing market is in Vegas, I may not be able to cash him out at the price we set. Instead of canceling the option and him having to put the house on the market while he's overseas, I'd like to:

 

1. Redo a deal with my current buyer at FMV for an upfront fee

2. Have the seller agree to close with my buyer at FMV to avoid getting the house back

3. Release my original option for a nice fee at closing

 

Am I missing anything? Or is there an easier way?

 

I don't really want to do this since it'll complicate things a little bit, but if the seller balks at lowering the price, I was thinking I could possibly assign my current deal to the original seller which would basically be giving him $100 additional cash flow (my spread on the SLO) for a nice fee at closing. Hopefully that makes sense! It's kind of my back up plan worst case.

[Jonathan RexfordFL 8]

Brian,

 

I have been off the board for a few days. Do you still need this document? If so just email me jdrrtr@msn.com

[Jonathan RexfordFL 8]

Wait its there.

[Brian - L.V. 0]

Wait its there.

Hi Jonathan. I'm sorry, I should have been more specific in the post. Yes, I did download option release form that you posted, but I was wondering about option release fee agreement that you mentioned. I appreciate it!

 

One quick question that I have is in my previous post where I talked about extending my current t/b's contract, I was wondering how do I show that the t/b put down option consideration and has rent credits when I'm forming a new agreement with possibly a lower purchase price? Just want to make sure the credits are on there to help her out with her financing. Thanks!

[Jonathan RexfordFL 8]

Brian its the same form. Just use an addendum with new agreement, that is going to be credited towards new price. Make a reciept and have it notarized to that effect.

[Brian - L.V. 0]

Just use an addendum with new agreement, that is going to be credited towards new price. Make a reciept and have it notarized to that effect.

 

Ok so I do an new agreement with the gross purchase price equaling the new price plus past rent credits and option consideration, so the net price is what I actually want to charge her, right? (ex. I set the new price at $260k. The old price is $280k with $5k in credits and $5k cosideration. So gross price on new contract is $270k - $10k credits/OC = $260k purchase price)

 

Or is it possible to just attach an adendum stating the new terms,purchase price, and past credits? I know this isn't that complicated, but I just want to make sure that her past credits are shown. I appreciate the help!

[Jonathan RexfordFL 8]

Either way will work. Just get total sign off for everyone that is concern.

[Brian - L.V. 0]

Either way will work. Just get total sign off for everyone that is concern.

 

The addemdum sounds like it's a lot easier way to go. I just wasn't sure if my first way would be too complicated. Good thing that I can go either route. Thanks for your help!

[wildwestinvest! 19]

If I'm reading it correctly, even if my option expires I am due the payment at closing? It's quite specific about being paid if they sign the agreement.

 

 

This could have made me $12,000 2 months ago...... at least it will make me $8,000 now!!!!!!!!

[MichaelC 160]

If I'm reading it correctly, even if my option expires I am due the payment at closing? It's quite specific about being paid if they sign the agreement.

That's my understanding of it.