Review my Purchase Option Agreement?

Question

Hi BPers,I

I have drummed up a Purchase Option Agreement, and was wondering if anyone would like to review it. It is obviously okay to edit/ tweak and use as you see fit. If you are interested and have an email available (post it, or either via signature or profile) I will gladly send it your way. If it is acceptable to copy and paste I can do that as well.

Many thanks,

Jake

Wayne Brooks · Answer

You have an "option fee" and then you have a "down payment" on the option fee? Also seems like you're trying to "slide your closing costs into the option payment".

Certainly find a local RE attorney.  I prefer to have the Actual purchase agreement signed now, contingent of course on exercising of the option, triggering an effective date.  Your "shall execute...according to the following terms"....your terms are incomplete and would be subject to interpretation, negotiation of missing details, etc. which may make it unenforceable.  You're missing basic things like the type of title to be conveyed, that clear and marketable title has to be delivered, proration of taxes, damages to the property during the contract/option time, etc., etc.

Mike Watkins · Answer

Could we review the buyer side of the contract?

Jake Ford · Answer

@Jeff Rabinowitz After reviewing the file upload procedures and T/Cs, I agree -- here it is courtesy of C & P:

OPTION AGREEMENT FOR PURCHASE OF REAL PROPERTY

THIS OPTION AGREEMENT ("Agreement") made and entered into this ____ day of _________, 20__,

by and between ______________________________________________________________________________,

whose principal address is _____________________________________________________________________,

hereinafter referred to as "Seller"

and _________________________________________________________________________________________,

hereinafter referred to as "Buyer":

W I T N E S S E T H:

WHEREAS, Seller is the fee simple owner of certain real property being, lying and situated in the County of ________________, State of ________________, such real property having the street address of:

_____________________________________________________________________________________________

WHEREAS, Buyer desires to procure an option to purchase the Premises upon the terms and provisions as hereinafter set forth;

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto and for the mutual covenants contained herein, Seller and Buyer hereby agree as follows:

1. DEFINITIONS.  For the purposes of this Agreement, the following terms shall have the following meanings:

(a) "Execution Date" shall mean the day upon which the Buyer or Buyer’s Assignee to this Agreement shall duly execute this Agreement;

(b) "Option Fee" shall mean the total sum of money paid to Seller in consideration of this exclusive Option, in the amount of ____________, plus additional closing costs if applicable, payable as set forth in attached Exhibit A;

(c) "Option Term" shall mean that period of time commencing on the Execution Date and ending on or before ____________, 20____;

(d) "Option Exercise Date" shall mean that date, within the Option Term, upon which the Buyer shall send its written notice to Seller exercising its Option to Purchase;

(e) "Closing Date" shall mean the last day of the closing term or such other date during the closing term selected by Buyer.

(f) “Grant of Assignment” shall allow the Buyer (“Assignor”) to grant unto the Assignee the exclusive and irrevocable assignment of Assignors interest, equitable or legal, of the Option to Purchase Real Estate agreement, hereto through the “Assignment of Option to Purchase”  (Exhibit B).  This Assignment is subject to all terms and conditions of said Option to Purchase Agreement.

2. GRANT OF OPTION.  For and in consideration of the Option Fee payable to Seller as set forth herein, Seller does hereby grant to Buyer the exclusive right and Option ("Option") to purchase the premises upon the terms and conditions as set forth herein.

3. PAYMENT OF OPTION FEE.  Buyer agrees to pay the Seller a down payment of ________________, for consideration of this exclusive Purchase Option.

4. EXERCISE OF OPTION. Buyer may exercise its exclusive right to purchase the Premises pursuant to the Option, at any time during the Option Term, by giving written notice thereof to Seller. As provided for above, the date of sending of said notice shall be the Option Exercise Date. In the event the Buyer does not exercise its exclusive right to purchase the Premises granted by the Option during the Option Term, Seller shall be entitled to retain the Option Fee, and this agreement shall become absolutely null and void and neither party hereto shall have any other liability, obligation or duty herein under or pursuant to this Agreement.

5. CONTRACT FOR PURCHASE & SALE OF REAL PROPERTY. In the event that the Buyer exercises its exclusive Option as provided for in the preceding paragraph, Seller agrees to sell and Buyer agrees to buy the Premises and both parties agree to execute a contract for such purchase and sale of the Premises in accordance with the following terms and conditions:

(a) Purchase Price. The total purchase price for the Premises shall be the sum of _______________________ ($________________); however, Buyer shall receive a credit toward such purchase price in the amount of the Option Fee thus, purchase price shall at that time be adjusted accordingly.

(b) Closing Date. The closing date shall be on _______________, 20____ or at any other date during the Option Term as may be selected by Buyer;

(c) Closing Costs. Buyer's and Seller's costs of closing the Contract. Buyer’s closing costs shall be prepaid as a portion of the Option Fee; and closing costs will be paid as defined in Exhibit A.

(d) Default by Buyer; Remedies of Seller. In the event Buyer, after exercise of the Option, fails to proceed with the closing of the purchase of the Premises pursuant to the terms and provisions as contained herein and/or under the Contract, Seller shall be entitled to retain the Option Fee as liquidated damages and shall have no further recourse against Buyer;

(e) Default by Seller; Remedies of Buyer. In the event Seller fails to close the sale of the Premises pursuant to the terms and provisions of this Agreement and/or under the Contract, Buyer shall be entitled to either sue for specific performance of the real estate purchase and sale contract or terminate such Contract and sue for money damages. Seller shall refund Option Fee to Buyer.

6. MISCELLANEOUS.

(a) Execution by Both Parties. This Agreement shall not become effective and binding until fully executed by both Buyer and Seller.

(b) Notice. All notices, demands and/or consents provided for in this Agreement shall be in writing and shall be delivered to the parties hereto by hand or by United States Mail with postage pre-paid. Such notices shall be deemed to have been served on the date mailed, postage pre-paid. All such notices and communications shall be addressed to the Seller at ________________________________________________

and to Buyer at _____________________________________________________ or at such other address as either may specify to the other in writing.

(c) Fee Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of __________________.

(d) Successors and Assigns. This Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against the parties hereto and their respective heirs, successors, and/or assigns, to the extent as if specified at length throughout this Agreement.

(e) Time. Time is of the essence of this Agreement.

(f) Headings. The headings inserted at the beginning of each paragraph and/or subparagraph are for convenience of reference only and shall not limit or otherwise affect or be used in the construction of any terms or provisions hereof.

(g) Cost of this Agreement. Any cost and/or fees incurred by the Buyer or Seller in executing this Agreement shall be borne by the respective party incurring such cost and/or fee.

(h) Entire Agreement. This Agreement contains all of the terms, promises, covenants, conditions and representations made or entered into by or between Seller and Buyer and supersedes all prior discussions and agreements whether written or oral between Seller and Buyer with respect to the Option and all other matters contained herein and constitutes the sole and entire agreement between Seller and Buyer with respect thereto. This Agreement may not be modified or amended unless such amendment is set forth in writing and executed by both Seller and Buyer with the formalities hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under proper authority:

As to Buyer this _____ day of _____________, 20_____.

Witnesses: "Buyer"

____________________________________________  ____________________________________________

As to Seller this ____ day of ______________, 20____.

Witnesses: "Seller"

____________________________________________  ____________________________________________

Jeff Rabinowitz · Answer

@Jake Ford, I was trying to encourage you to post the contract here in the forum. Don't upload it to the files if you are not sure it is a legal contract.

Jeff Rabinowitz · Answer

@Jake Ford, welcome to BP. You might get a better response if you post the purchase agreement you would like reviewed. There are other templates that may be useful in the "File Place" section. Look under "Tools" in the navigation bar.

Real estate laws vary considerably between the States. If you choose to use a template you should try to find one written for your State and it is always best to have it reviewed by a lawyer well versed in the applicable law in your State before you use it.

Jake Ford · Answer

Hi @Jeff Morelock I have no qualms with getting a contract from an attorney; however, I put a decent amount time into this and was just looking for a review.

@Jeff Rabinowitz I will upload mine to the files section and hopefully receive some reviews.

Thanks again

Jeff Morelock · Answer

Yikes!

I'd spend the $250 for one written by a real estate attorney licensed to practice in your state instead of one you "drummed up" and/or copying an pasting something together.

Real estate equals thousands and thousands of dollars that could end up coming out of your pockets, ultimately making them smaller pockets because you wouldn't pay for an attorney to write one for you.

Review my Purchase Option Agreement?

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