Non-Exclusive Option agreement - Posted by MikeC

Real Estate Investing Triple Net Leases
1

Posted by alvin on June 02, 2008 at 15:47:07:

  1. Investor/Seller would already have a contract with original Seller with his price.
  • correct
  1. I would have Investor/Seller give my NEO to original Seller to sign.
  • correct
  1. Then I would have my retail end buyer sign contract with original Seller on title.

  • end buyer will sign contract you exercising the NEO that has both you and the investor on it.

  • original contract with the investor probably had an exclusive option or a purchase agreement with and/or assign. if the exclusive option was recorded to cloud title, then this has to be removed from public records in order for you to proceed with the NEO and end purchase.

  1. Then have some sort of agreement with Investor/Seller to pay him off his profit/fee (cancel/release his contract), at closing, if and when my end buyer closed.
  • correct. original contract the investor had has to be cancelled or ripped up. original investor will be on the NEO anyways. just divide your profits based on that NEO
  1. “just include the investor on your NEO that way you both have a vested interest to resell on higher terms” …So the Investor/Seller and I both have our names on the NEO to original Seller ??
  • correct

So the Investor/Seller would have two contracts with the originals Seller ??

  • correct.

  • 1st contract is probably an exclusive option or purchase agreement

  • 2nd contract is a non exclusive option with both investors on it.

  • it’s a race. if the original investor finds an end buyer before you, then you withdraw your NEO.

  • if you find an end buyer before the original investor, have the original investor cancel/release their exclusive option or purchase offer and exercise your NEO. original investor will just split the profits with you.

So then there would be just one cancel/release fee agreement presented to original Seller spelling out Investor/Seller gets $xxx and I get $xxx dollars at closing ??

  • correct. this is based on title or escrow on how to pay out the proceeds. we use a land trust and hold beneficial interest to protect our profits. we tell the trustee who holds legal and equitable title on how to distribute the proceeds to its beneficiaries. we have a beneficiary agreement that determines who gets paid what.

  • i dont know how this would work without the trust. i know the basics of wholesaling and assigning contracts but i dont know how you’d get paid for $x.xx in escrow. ive heard some investors used pay off demands to an LLC.

Thanks for your help in clearing this up.

2

Non-Exclusive Option agreement - Posted by MikeC

Posted by MikeC on May 24, 2008 at 08:08:19:

After i have my seller sign my NEO how do i record our agreement? Do i take it to a title Co? In other words how do i ensure that this will hold up in court?

3

Re: Non-Exclusive Option agreement - Posted by alvin

Posted by alvin on May 28, 2008 at 21:31:43:

is this NEO related to the NARS PAC/EHT trust?

i send out about 10-15 NEO’s a month along with full asking price offers.

main niche is sub2, land trusts, triple net leases, equity sharing

i use a non exclusive option but i dont record it. the NEO fee is $1.00. why? because its non exclusive!

this is the email i send out to sellers when i send out my non exclusive option and my full asking price offer

Hello Mr. Seller,

Attached is the preliminary non-exclusive Full Price Offer.

This Non-Exclusive Offer is a Non Binding Agreement that allows us to market your property to find someone to come in and take over the payments using our terms. Important ** The Non Exclusive Offer also means we’re not tied to you, you’re not tied to us, we’re not tying up your property and we’re not going to even record the option. So it’s risk free for you to market your property in tandem with us. You are still free to talk to any real estate agent, conventional buyer or investor that can do an outright purchase with you. If we find our tenant/buyer before you find a conventional buyer with good credit and a qualified down payment and sourced and seasoned reserve funds, then we would exercise our option and proceed with our rent to own program. If you find a qualified, conventional, buyer before we find an tenant/buyer, we’ll withdraw our option and you can proceed with your cash purchase. So this is exactly what it is, a Non-Exclusive Offer, that just gives you another option to move your property if you can’t find a conventional buyer for what you want now. Kind of like your backup plan, if you will.

The non exclusive option is for 90 days to do our due diligence and to see what we can do to find a buyer on our terms. If it goes past 90 days, then it just expires and can be extended if we all mutually agree to do this. You will continue to market for your own conventional buyer and we will market for our own. Fair enough?

The purchase offer to your trust would be signed and executed contingent upon us finding our tenant/buyer.

4

Re: Non-Exclusive Option agreement - Posted by Peter

Posted by Peter on June 02, 2008 at 10:30:01:

How do you handle the NEO if the Seller is an Investor (not original Seller) with property under contract and your end buyer uses lender financing?

What paperwork is required to make this transaction smooth and how you and the Investor/Seller get paid?

5

Re: Non-Exclusive Option agreement - Posted by alvin

Posted by alvin on June 02, 2008 at 10:43:28:

the investor would have to cooperate with me and i would need to have a NEO with the original seller to work creatively with me.

if we’re using a land trust, then that’s how we’d protect our interest inside of the homeowner’s trust.

6

Re: Non-Exclusive Option agreement - Posted by Peter

Posted by Peter on June 02, 2008 at 13:08:38:

That’s what I was thinking…have the NEO with original Seller instead of the Investor/Seller to avoid the chain and confusion.

Then have some sort of agreement with Investor/Seller to pay him off his profit/fee, at closing, if and when my end buyer closed.

7

Re: Non-Exclusive Option agreement - Posted by alvin

Posted by alvin on June 02, 2008 at 13:20:39:

yup you got it. just include the investor on your NEO that way you both have a vested interest to resell on higher terms

8

Re: Non-Exclusive Option agreement - Posted by Peter

Posted by Peter on June 02, 2008 at 15:34:25:

I Thought…

  1. Investor/Seller would already have a contract with original Seller with his price.

  2. I would have Investor/Seller give my NEO to original Seller to sign.

  3. Then I would have my retail end buyer sign contract with original Seller on title.

  4. Then have some sort of agreement with Investor/Seller to pay him off his profit/fee (cancel/release his contract), at closing, if and when my end buyer closed.

  5. “just include the investor on your NEO that way you both have a vested interest to resell on higher terms” …So the Investor/Seller and I both have our names on the NEO to original Seller ?? So the Investor/Seller would have two contracts with the originals Seller ?? So then there would be just one cancel/release fee agreement presented to original Seller spelling out Investor/Seller gets $xxx and I get $xxx dollars at closing ??

Thanks for your help in clearing this up.