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A Lease is a right to possession, an option is a right to buy. Can I give the right of possession and right to buy in an option, which is shown in the introduction to options pdf in the DUE-ON-SALE option. I am of the opinion I can write anything I want in a contract as long as both parties agree. I hope I am clear. My goal is to sell a house on an option for let say 11 months and get it back, I dont want to rent.
Example
ARV = 200,000
Sell Price = 400,000Option to buy the house in next 12months @ $400,000 who is going to buy and who is going to loan, thats the catch.
I collect $1000 as option consideration and 1st months option consideration $1000 I collect $2000 option consideration.
Option gets renewed automatically every 30 days so option gets renewed 12 times on 12th renewal the person signs a release of option and I refund $1000 for signing the release. If they want to live longer you can strike the same deal or may be something more creative 🙂
What can go wrong with this? All views are welcome
Regards
AjayAjay,
Ok, yes — I understand.
You can give the tenant the option to lease. And the option to buy.
JM used to do that quite often.Just be EXTRA clear with your tenants that’s what you want to do. And document it.
Many non-standard agreements end up in front of a judge who understands it even less.Be careful you don’t wrap yourself around the (option/lease) docs trying to be creative.
I know, I’ve done just that.Keep us posted,
Mike
Excuse me if I’m not replying to the exact question that was asked,
I have been options for years and executed as the seller therefore I am the optionor in all of the transactions that I put forth and offer.
I am once again during the pandemic going to be offering a property.
I have a pretty thorough agreement and you can do a unilateral option, but if you do a bilateral option that usually gives you the right to purchase or sell at the same time that you’re doing your option.
My situation is a little different……….
I own my property outright, no debt service and where I am going to do is I am going to simply separate the house from the land.
This will be done with the use of a trust, the house will be on by one trust and the land will be owned by another.
My state is pretty much outlawing rental properties and therefore I will not collect rental payments any longer!
What I plan to do is to offer an option for someone to purchase the home.
There will be a carry-on in that I will also offer the property to that same person. Both contracts will be holy exclusive to the purchaser and there are about 5 or 6 Different Way that my contract will state, how they can lose their option.
Contrary to the traditional option, I also have a contract that includes interest on the unpaid balance of the option during the options term, whereby iron interest on the unpaid balance much like a note or mortgage.
I am revamping my option to read like a lease option but it truly does only convey an option to the potential purchaser.
During the term,
The interest on the option for the land will have interest during the full term. Therefore, it will be earning income at the rate placed on the option.
Interest on the option for the house will have interest during the full term. Therefore, it will be earning interest on the income placed on that option.
I have a specific contract giving time frames as to when the exercise of the option can take place. This can all be negotiated with your purchasers.
I never convey title by way of the option. I always convey title, when and if a borrower/optionee actually performs.
As Jack Miller said when he taught classes you need to think outside the box relation point.
And if you don’t think it’s possible, think again because it might just be.I’m going to utilize 2 different agreements and I would love to know and get ideas from anyone who has ideas themselves on how I can better utilize and structure my transaction. The main reason that I am not doing rent is the state that I am in and they are not friendly to landlords. Therefore, I no longer want to be a landlord but instead a seller conveying only the option and the right to purchase.
When the purchaser performs, they will attain a desirable result by purchasing and or owning the property. I do plan to make each the land in the home. Under separate contracts.
It is totally possible that each of those could be owned by different entities, this could cause additional confusion and chaos when the potential purchasers attempt to obtain legal counsel. In the event they were litigious this could be a great discouragement to them pushing forward.
I would love to get anyone’s them, but and ideas,
Dan Butler my email addresse is, [email protected]
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