Posted by JPiper on January 27, 2000 at 15:45:12:
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L/O vs Earnest Money Contract - Posted by Gene S Hou Tex
Posted by Gene S Hou Tex on January 27, 2000 at 01:47:47:
Say you are selling to a Tenant/Buyer on a L/O with a separate lease and a 1 page pro-landlord tenant purchase option agreement (like Bill Bronchick’s). My question is when do you sign the earnest money contract? If your answer is, “In the future when the t/b exercises his option!” Then my next question is won’t problems creep up like closing costs,repair costs,etc.??? To add to the confusion in my mind I just finished looking at Ron Legrand’s T/B L/O documents & it is a modified earnest money contract in great detail about these items. So who is right? The Legal Eagle? -OR- The Old Pro? Thanks for your response!!!
Re: L/O vs Earnest Money Contract - Posted by JPiper
Posted by JPiper on January 27, 2000 at 08:34:43:
Personally I wouldn’t do an earnest money contract. I think this is a lousy idea on Legrand’s part if that’s how he does it.
First, if you ever wanted additional ammunition for the tenant to use regarding equitable title…you just gave it to him. Yikes! I’d rather shoot myself in the foot.
Two, why are you concerned with this to begin with? You can add a clause covering the salient things that might be important to you…optionee shall pay all costs…that type of thing. But lack of definition here actually helps you rather than hurts you in my opinion. What you’ve done is to agree to sell the property at top dollar…you haven’t agreed to anything else.
I’m not that familiar with Legrand…but from what I’ve seen his strong point isn’t in the contract area.
JPiper
Re: L/O vs Earnest Money Contract - Posted by JoeB(Atlanta)
Posted by JoeB(Atlanta) on January 27, 2000 at 07:03:05:
Gene, if you’re asking when does T/B sign the Purchase Agreement (you called it ‘earnest money contract’)…I have T/B sign it AND lease AND option (with non-refundable option consideration/fee) ALL on day one. That way there are no misunderstandings down the road.
Hope this helps,
Joe Brillante
Re: L/O vs Earnest Money Contract - Posted by Phillip
Posted by Phillip on January 30, 2000 at 10:30:48:
What is your opinion regarding giving the seller in a lease option deal money “up front” as a type of option consideration to encourage the deal to move forward? Should I pay or as Bronchick states, the seller should be happy given that I as the buyer is solving his problems. Please comment.
Re: L/O vs Earnest Money Contract - Posted by Gene S Hou Tex
Posted by Gene S Hou Tex on January 27, 2000 at 12:53:21:
THANKS JPIPER! Your sentiments were kinda what I expected. However, it gives me confidence to hear it from a PRO! Are you sure you’re not a guru in disguise?
Re: L/O vs Earnest Money Contract - Posted by JPiper
Posted by JPiper on January 30, 2000 at 11:53:15:
The upfront money is something that is going to be determined in your negotiation. I don’t think you can make a categorical rule that says “no upfront money” or “seller should be happy I’m solving his problem”.
The best scenario for you is no upfront money, and if you can accomplish that then that’s what you should do. On the other hand, you could pay upfront money if you know what the market will pay you when you remarket the property. As long as you leave a margin between what you pay and what you get, that would work out…assuming of course that you have taken your risk in the deal into account.
JPiper