Option to Purchase Questions

[Elizabeth Smith]

Hello, I just found BP and am pleased to be a part of this great resource. I have a few years of RE investing under my belt but there is always more to learn. I have a current seller who has agreed to sell me their property for not much more than what they owe, with the conditions that I keep their mortgage current and pay them off in a minimum of 6 months, interest free. I have done an Option to Purchase, assigning it to another buyer before but this time, I'd like to keep the property myself but I need time to improve the property by adding a couple of mobile homes so I can rent them out as well as the existing home. The property will cash flow now with just the stick built house so adding mobiles is frosting on the cake. The seller knows I am taking full responsibility for all work and funds needed to do this and I get full control of the property from the get go.  I am looking for feedback on this Option to Purchase draft to see if anyone has any suggestions/edits. 

Real Estate Option Contract

The Seller and the Buyer (named below) hereby enter into this Option Contract for Sale and Purchase of real estate for property located at: ______________________. The Seller, in consideration of the Buyer paying $100.00 (the “Option Deposit”), gives to the Buyer the exclusive option (the “Option”) to purchase the property described herein (the “Property”). At the time the Buyer exercises this Option, the Option Deposit shall be applied towards the purchase price of the Property. The Option Deposit is otherwise non-refundable.

• a)Parties: (Seller), and and/or Assigns (Buyer), with reference to the property herein described as _____________________ (the “property”).
• b)Seller grants Buyer an Option to purchase the property including any household furnishings, personal belongings, fixtures, etc. still in or on the property at the date of this signing, for a total price of $000,000.00. The duration of this Option shall be for a minimum of six (6) months and may be extended for six (6) month intervals, not to exceed five (5) years (the “Duration Period”). Exercise of this Option shall be provided from Buyer to Seller either verbally or in writing.
• c)Buyer agrees to pay Seller a monthly amount equal to Seller’s mortgage until closing. All monies paid will be credits, reducing the purchase price by the total amount paid up until the closing date. Buyer and Seller agree to use a third party impound account to pay and receive funds.
• d)Seller grants Buyer full rights to repair, improve, use, occupy, rent out, etc. the property in any manner Buyer deems necessary or useful.
• e)Seller does not and shall not have any obligation to fund or make any repairs, replacements, corrections, improvements, additions, etc. to the property before or after closing.
• f)Buyer takes full financial responsibility for any and all repairs, replacements, corrections, improvements, additions, etc. needed on property.
• g)If Buyer should default, all repairs, improvements and monies paid will revert fully back to Seller.
• h)The Sale Contract shall include the following terms: 1) Closing will take place within thirty (30) days after Buyer exercises this Option. 2) Seller’s sale of the Property is and shall be “As-Is”, “Where-Is” and “With All Faults”, and Seller does not make any representation or warranty regarding the physical condition of the property. 3) The Sale Contract shall contain Seller’s standard “As-Is” sale language. 4) Seller shall provide to the Buyer a Seller’s Disclosure Report 5) Buyer and Seller shall each split equally all closing costs and fees.
• i)This contract represents a full and complete integration of all terms and conditions and precedents, and represents the entirely of the agreement between the parties.
• j)I, ___________ (Seller), understand all the terms of this Option and agree to abide by each one of them. My signature below also declares I have received the Option Deposit money.
• ______________________________________________/______________
• (Seller) Date
• ______________________________________________/______________
• and/or Assigns (Buyer) Date