Does anyone have an Option Agreement template they’re willing to share here? I’m looking for something short and to-the-point (preferably just one page), that will give me the option, but not the obligation, to buy a property within a given time period.
If you’ve got a good form that’s worked well for you, that’s what I need!
Can you share access to that document so it's public @adamalabbadi? I'm not able to see it when I click on that link.
one of the most straightforward ways to do an option agreement is to You can include a clause like this in Seth's standard Purchase and Sales Agreement template available from the REtipster site:
@karljames that's great! Are you just adding this to the original purchase agreement, or do you replace a certain section that's already there?
And do you change the title of the document? Is it now called an OPTION AGREEMENT instead of a PURCHASE AND SALE AGREEMENT, since the objective is to make this an Option now, instead of a PA?
@seanjean
From my understanding in vacant land, the asssignable purchase and sale agreement acts as an option.
To Karl's point, by adding a monetary amount to it, and adjusting the closing date, this in essence becomes an option. The monetary exchange gives this agreement weight. Otherwise it is basically a letter of intent.
@jawollbrink said:
@seanjean
From my understanding in vacant land, the assignable purchase and sale agreement acts as an option.
I would agree with that for the most part, but there are always caveats as to what the "best" type of agreement is, depending on your intent and how well you communicate it to the seller.
For example, if your intent is to flip the property to another buyer and not take title yourself, both an assignment and an option could help you accomplish this. An option would probably make your intent clearer to the seller, since the document doesn't imply that you're going to buy it yourself (like a PA would). However, an assignment is arguably a more direct way to make it happen (assuming you've got a buyer lined up for the deal), you'd just want to explain VERY clearly to the seller what you're trying to do (as I explain here), so they don't feel caught off guard if you never end up closing or someone else ends up buying their property in the end.
On the flip side, if your intent is to buy-and-hold the property yourself (e.g. - say if you want to develop it, rezone it at a later date or just lease it out long term), but you're also waiting on other external factors to line up (like a zoning change or your ability to buy other neighboring properties), then an option might be more appropriate, because your intent isn't to flip the contract. If your goal is to simply have the right to buy the subject property if all your other plans line up, but you don't wan't to obligate yourself to do so (and you also don't want to mislead the seller into thinking that you're planning to close, when you well may not be able to), that's where I think an option could win out, in terms of making more sense.
But all in all, I think either can work, it really just boils down to what the contract says and how well you communicate your game plan with the seller.
@seanjean I used to add it into the contract, when I was using a Word template and editing each time, I would insert it below the sales price section on only those agreements where I was using it. Now that I have a Podio app that generates my standard form contract. So, I actually have Podio add it into the "Additional Terms and conditions section of the contract. For most contracts, i default to "None" in the additional terms and conditions section for one with an option I use wording very sim liar to the above. I.e. says "paragraph ## below" to "paragraph 3 above"
Pro-tip: I use a utility called Text Expander - which I believe Seth has reviewed on a blog post - so I only have to a few keystroke stroke to inset the option wording into the Podio contract w section; i.e. I type k-option (without the dash) and TextExpander inserts all of the wording I mentioned above. (Those who use TextExpander will understand why I had to insert the dash, the second time, I tried to shared the example in this post - grin).
That's great @karljames thanks! I will look into TextExpander too, sounds like a great tool.