Posted by Lynn on September 14, 2003 at 09:17:40:
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Tew’s Option to Purchase Form Paragraph 6 question - Posted by Lynn
Posted by Lynn on September 13, 2003 at 21:52:39:
I am about to use Ernest’s Net Lease and Option to Purchase forms for the the first time. I don’t quite understand paragraph 6 of the “Option to Purchase” form. I need to be able to explain it to my tenant/buyer in simple language. Can some one explain it to me in simple language. I’m feeling really stupid not understanding this paragraph. Everything else in both forms is quite simple to understand.
Paragraph 6 reads as follows: RIGHT TO CURE: In the event of a default in any loan payment on the above described property, or in the event of any impairment to the title which reduces the value of the Buyer’s interest, the Buyer shall have the right, but not the obligation, to cure such default and receive full credit therefore against the purchase prive set forth above.
Thanks in advance.
Tew’s Option to Purchase Form Paragraph 6 question - Posted by Bart
Posted by Bart on September 13, 2003 at 23:23:29:
It means should the Seller fail to make the underlying loan payment etc. the Buyer can step in and cure the default(pay it off or bring it current). It gives the buyer peace of mind. Are you sure this is the form he uses when selling? Most savvy investors don’t buy like they sell.
Tew’s Option to Purchase Form Paragraph 6 question - Posted by Lynn
Posted by Lynn on September 14, 2003 at 07:49:49:
The forms I am referring to are a two-part set. The first one is a “lease agreement” and the second one is the “option to purchase”. If I am reading everything correctly, yes these are the forms he recommends when selling/leasing. He also has an all in one “lease-purchase agreement” which refers to making lease payments as per an attached payment schedule and also refers to payments being based on an interest rate. If I am reading correctly and understanding everything, this all in one form is more likely to be construed as a sale by the IRS and possibly also in an court if doing an eviction.
If the separate “lease” and the separate “option” are the correct forms to use when selling/leasing, would you leave paragraph 6 in or would you delete it.
Thank you
Re: Tew’s Option to Purchase - Posted by Ernest Tew
Posted by Ernest Tew on September 17, 2003 at 06:21:56:
Lynn, for the buyer’s protection and peace of mind, you should leave paragraph 6 in the agreement.
If an owner has liens against the property, it is only fair that the buyer have the right to pay and get credit for it in the event the owner defaults.
When you point out to the buyer that it is for their protection, it tends to improve their trust in you.
Tew’s Option to Purchase Form Paragraph 6 question - Posted by Bart
Posted by Bart on September 14, 2003 at 09:10:19:
I just looked at Ernest’s web site and it is the document used for selling. I would leave it in and point out to the tenant buyer that it is there for their protection.