Option on title of a property I am closing

[Au Jia]

Hi all,

I have a situation in the process of purchasing a rental property. In the Schedule B Exceptions from Coverage of the title commitment, it states a "Memorandum of Option" between previous seller and buyer in 2013. This could lead to a future event that optionee comes up and buy my property at a stipulated price.

Currently, I have heard a few things:

- Title company: they say there have been a few transactions after this Option, there should be no issue, but this is not covered by insurance

- an unpaid legal advice from a local lawyer: this is a defected title, should cancel the purchase

- Realtor: we will try to remove this, but this is not an important issue

- Realtor friends: No. Only purchase if it's removed

- Lender: Need to see what comes out from Title company's effort

Difficulties:

- Can't reach the optionor, and optionee is an LLC

- Public record in Texas doesn't show the image (working on recovering)

- Closing date is soon

Question:

- What can I do to remove it?

- Will an option agreement expire once there is a subsequent transaction?

- Should I proceed?

Please please help! This is my first time seeing this thing and I really appreciate any advice you have as an investor, a lawyer or a realtor. I understand no advice here should be treated as legal advice, so it would be really helpful to tell me what you would do.

Thanks BP community!

[Tom Gimer]

I assume this is a cash deal so there is no lender to object to this exception. If a lender saw this it would kill the deal.

If I was involved I would tell the seller... pay for affirmative title insurance coverage to respond to this issue or I walk. This risk has a value. And with every day that passes, the risk of that occurring within the applicable limitations period decreases.