Non-exclusive option contract to gain equitable interest?

Question

Would it be a good strategy to propose a non-exclusive option contract just to get equitable interest in order to legally attempt to sell a property while not tying up the seller? Its seems like a no-brainer to me but I haven't read about anyone doing it. I am thinking this could put most of the dead leads you get to use and sounds less complicated than lease options.

Vince Mayer · Answer

@Benjamin Cowles No a letter of intent doesn't give you equitable interest. If the seller still wants to have the ability to sell outright to a buyer while you have an option agreement, write that into your option agreement. Make it contingent upon what happens first, he finds a buyer or you find a sub-lessee or sell your option agreement.

I'm not a lawyer but it would seem if you and the owner are in agreement on this, it should pass muster. Unless of course you are telling him that you are working to find a buyer for his property and you don't have a license. Are you licensed or do you have a buyers agent?

John Thedford · Answer

I don't think your idea is feasible. Read 475.43. You want to broker real estate. Get a license. 63 class room hours, pass the class test, then pass state test. Once licensed, problem solved.

The 2016 Florida Statutes

Title XXXIIREGULATION OF PROFESSIONS AND OCCUPATIONSChapter 475 REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERSView Entire Chapter    475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.History.—s. 3, ch. 22861, 1945; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 27, 42, 43, ch. 79-239; ss. 2, 3, ch. 81-318; ss. 28, 30, ch. 88-20; s. 10, ch. 91-89; s. 4, ch. 91-429; s. 15, ch. 93-261; s. 376, ch. 97-103; s. 41, ch. 2003-164.

Title XXXIIREGULATION OF PROFESSIONS AND OCCUPATIONSChapter 475 REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERSView Entire Chapter

Title XXXIIREGULATION OF PROFESSIONS AND OCCUPATIONS

Chapter 475 REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERS

View Entire Chapter

475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.History.—s. 3, ch. 22861, 1945; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 27, 42, 43, ch. 79-239; ss. 2, 3, ch. 81-318; ss. 28, 30, ch. 88-20; s. 10, ch. 91-89; s. 4, ch. 91-429; s. 15, ch. 93-261; s. 376, ch. 97-103; s. 41, ch. 2003-164.

History.—s. 3, ch. 22861, 1945; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 27, 42, 43, ch. 79-239; ss. 2, 3, ch. 81-318; ss. 28, 30, ch. 88-20; s. 10, ch. 91-89; s. 4, ch. 91-429; s. 15, ch. 93-261; s. 376, ch. 97-103; s. 41, ch. 2003-164.

Jeff B. · Answer

IMO: (non-authoritative, non-legal advice)

• the term NON-Exclusive only means these rights can be acquired by others besides yourself.
• An OPTION is acquired for a price and that is what creates the equitable interest.  Several parties with E.I. just complicates the heck for the seller, but it is possible.  The seller then needs to settle with all parties to enable him/her COE.

Benjamin Cowles · Answer

Thanks. And no, not an agent nor have I one.

Mike Cumbie · Answer

DISCLAIMER: Not a lawyer or wordsmith so just some rambling.

The purpose of equitable interest is so that you have a stake in the property. In order for them to make it "free and clear" they have to make you whole. They have to "settle up" with you first (like a lien for instance) before someone else can have a "marketable title". You own a right to it that they cannot take away without your permission.

With a "Non exclusive" clause they are not locked into you. If they are not locked into you then they do not have to settle up with you, so do you really have equitable interest?

Like I said i could be wrong, just some thoughts. I hope to see a wordsmith/legal mind jump in though on the hypothetical.

Benjamin Cowles · Answer

For that matter can't you write into the contract or exclude whatever you want?

Benjamin Cowles · Answer

To my understanding that is the purpose of the NON-exclusive option. I've only read about in a couple places.

Benjamin Cowles · Answer

Does an LOI give you equitable interest?

Vince Mayer · Answer

@Benjamin Cowles

I believe that would be a letter of intent, not an option.

Jeff B. · Answer

I believe that while an option is in effect, the option holder has the First Right of Refusal; can step into the position of anyone making an offer.  Effectively you ARE restricting the seller.

Non-exclusive option contract to gain equitable interest?

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