Posted by Ann (NC) on October 27, 2003 at 16:47:04:
Because I haven’t studied up on Sub-2 pro’s/cons, and don’t know how. Any suggestions?
Ann
Option contract price? - Posted by Ann (NC)
Posted by Ann (NC) on October 23, 2003 at 13:48:48:
Would it be possible, in getting an option to purchase, to put, instead of price, the amount owed (preFC)? Sellers have already agreed they just want to walk. Marginal equity. There is a 1st and 2nd; not sure how much the 2nd will discount. (same deal I posted recently).
Re: Option contract price? - Posted by Brent_IL
Posted by Brent_IL on October 23, 2003 at 23:52:04:
In an option contract, you don’t need to state an exact number for the strike price if you state a clear and unambiguous way that the price can be calculated, e.g., the total of the remaining balances of the first and second mortgage liens.
Re: Option contract price? - Posted by Ann (NC)
Posted by Ann (NC) on October 24, 2003 at 01:33:32:
Thanks…exactly what I was looking for. Have not heard this discussed before.
What about arrearages or late fees…include or mention that?
Thanks. This has helped.
Ann
Re: Option contract price? - Posted by Brent_IL
Posted by Brent_IL on October 24, 2003 at 11:14:12:
Ken’s right. You should include more.
When I use an option contract, I fill out the purchase contract for that house at the same time. This way there are no loose ends. In your example, arrearages and late fees would be paid up in escrow.
Re: Option contract price? - Posted by Ken (in Iowa)
Posted by Ken (in Iowa) on October 24, 2003 at 08:45:03:
Ann,
I’ve learned so much from Brent’s postings here that I hesitate to even try to add anything to what he said. However, if I were writing the option, in addition to saying “the remaining balances of the two loans now existing on the property” (or whatever exact words you use), I would add “not to exceed $x” (whatever you expect the balances to be at the time the option is exercised) so that you are not paying more than you expect to be paying at the time. In that way, you could both protect yourself and address the issue of arrearages and late fees.
Just my thoughts…
Ken (in Iowa)
Re: Option contr price?/Brent/Ken/How’s this? - Posted by Ann (NC)
Posted by Ann (NC) on October 24, 2003 at 17:58:19:
Ken,
Thanks for your attention to this matter…I’ve never heard of this before, but I’ve heard of it used with an option to acquire beneficial interest in a land trust. Thanks to Brent, too.
How’s this: since I don’t know what, if any, equity would result, what if I mention in the option, or perhaps a separate affidavit, that the max and min house price within x miles, or some such critera, was ???K; or/also…sellers/owners acknowledge that currently 1st loan payoff is $x and 2nd is $y, not including any fees charged by leinholder and any property tax and property insurance due. (possibly with an attachment which would be the actual payoff letter(s) through whatever date is most recent one I had at the time of signing?
This would be more of a CYA measure, to make clear the owner’s original intent to just want out of the loan, and not wanting to participate in any “profit”, which as I said is going to be very marginal as far as I can see. (I have their original info from the referral I received on them that they only wanted the amt of the loan; that was posted by one spouse, and the other has complied thus far).
It think it will be very thin, but I’m intending to persue it. Walking is an option, but to me, not until I know the specifics. A learning situation for me for now, not my main investment plan!
Thanks again to you both; I’ve learned so much…I’ve read a lot on this board, but had not seen this option before.
Ann
Re: Option contr price?/Brent/Ken/How’s this? - Posted by Brent_IL
Posted by Brent_IL on October 24, 2003 at 20:53:47:
If the option strike price specifies a range, that’s inexact and arguable, but you could say that your option is exercisable if you proffer an offer of not less than ?something.?
If you make your offer ?pursuant to that certain contact between the parties to buy the subject property dated ?? or something similar, all of the insurance, taxes, arrearages, et al, with be addressed in the purchase contract.
Why don?t you buy subject-to and use your CYA?s to document the seller?s intentions.
Pssst! Brent, Please see my reply to Ken (NTXT) - Posted by Ann (NC)
Posted by Ann (NC) on October 24, 2003 at 18:00:23:
NT