Option to purchase clause - Posted by Freeman

Posted by Houserookie on August 23, 2003 at 19:05:03:

Brent is right on target. Also, unless otherwise stated in the contract, assignments transfer only the rights to a contract, not the LIABILITY.

To quote…

>>>>>>>Your clause gives you the right to buy. It does not give you the right to sell the house, to advertise the house for sale, to list for sale with a RE broker, or to place for sale signs on the property. It doesn’t stop the owner from letting the place, or transferring title to someone else subject to your option.

The and/or assigns thing gives you the right to assign the rights and obligations that you have under the contract, but it doesn’t give you the right to sell or offer to sell on other terms that you may choose to accept.

Option to purchase clause - Posted by Freeman

Posted by Freeman on August 23, 2003 at 08:32:16:

I read an article about using an Option to Purchase Clause in wholesale offers that says something like this: “Seller grants buyer exclusive 30 day (60,90) option to purchase property at said price and terms.” I’m a newbie wanting to do rehabs and retail flips. I looked at a house yesterday that was in a rental neighborhood (close to a university, and a little run down, not a candidate for a retail flip). I do NOT desire to be a landlord, but thought I could maybe wholesale this house to another investor. Here’s my questions: Does the option to purchase clause give me the ability to market the house to other investors for 30, 60 , 90 days (or whatever)with the option to get out of the deal with my earnest money if I can’t find a buyer by the option time limit? Also, why would the seller agree to this?

Re: Option to purchase clause - Posted by Tom-FL

Posted by Tom-FL on August 23, 2003 at 19:08:03:

You CAN try doing wholesale flips as you laid out, but it could cost you a bundle. On an option, there is not “earnest money”, there is “option consideration”, a nonrefundable payment to compensate the owner for your unilateral right to buy the house in the specified time frame. Now, if it were your house, how much would it take to persuade you to keep your house off the market, especially if you are under time pressure to sell?

Re: Option to purchase clause - Posted by Brent_IL

Posted by Brent_IL on August 23, 2003 at 14:49:29:

If they are unambiguous, most legal terms do what they say.

Your clause gives you the right to buy. It does not give you the right to sell the house, to advertise the house for sale, to list for sale with a RE broker, or to place for sale signs on the property. It doesn’t stop the owner from letting the place, or transferring title to someone else subject to your option.

Have you ever tried to market a run-of-the-mill deal in 30days? Your aren?t guaranteed success.

The and/or assigns thing gives you the right to assign the rights and obligations that you have under the contract, but it doesn’t give you the right to sell or offer to sell on other terms that you may choose to accept.

This clause has nothing to do with earnest money. Did you mean option consideration?

This is an example of why RE lawyers who litigate will never be scrounging around for work. It is too easy for those of us who are legal laymen to mix-and-match terms that are incomplete or incompatible, and wind up with an agreement that is not only actionable, but one that doesn?t do what we intended.

I realize that many folks are gung-ho on options, but take a look at using a contingent purchase agreement in the alternative.

Re: Option to purchase clause - Posted by Randy

Posted by Randy on August 23, 2003 at 08:48:54:

If you put it in the contract it does? make sure the contract says “Buyer and/or assigns” on the “name” line. Make sure there is an inspection clause … “Buyer reserves the right to show house to prospective tenants, contractors, affiliates” or something to that effect.

The seller will agree to it when you causally mention it to him/her as a normal course of business as though you do this several times a day? if you?re timid about it or act like it?s an unusual request the seller may be uncomfortable about it or object to it.