?Option Deal?

[JudyGreen]

Merry Christmas

We have a lady that would like to give us the option to buy her home.

So we gave her Barry`s Blank option agreement (Buyer) to bring over to her lawyer.

She brought it to her lawyer & The lawyer advised her not to sign the agreement due to section 5 in the agreement.

What other avenues could we run down if the seller isint interested in this Agreement but she is interested in our potential buyers?

Can we collect a finders fee?

Any ideas from any one would be wonderful.

Thanks
Judy Green
403 998-1604

 

[Dan_Eisenhauer]

For those of us unfamiliar with that agreement, what does Section 5 say?

If you sell that agreement, when signed, to another investor, sure, you can collect a finder`s fee.

 

[antaynguy]

QUOTE (Dan_Eisenhauer @ Dec 19 2009, 04:45 PM) For those of us unfamiliar with that agreement, what does Section 5 say?

"5. Details of Sale. If Option is exercised, sale will close according to the most current real estate purchase contract approved by the Alberta Real Estate Association. The completion date for the sale shall be 30 days from the date of exercise of the option or such other date as the parties may agree on. If Buyer has in turn sold to his tenant or another buyer, Seller will cooperate to achieve a simultaneous closing with one transfer of land.
"

This clause is from Barry`s Option`s template. Not sure if this is what Judy was refering too.

Antay

 

[JudyGreen]

QUOTE (antay @ Dec 21 2009, 11:02 AM) "5. Details of Sale. If Option is exercised, sale will close according to the most current real estate purchase contract approved by the Alberta Real Estate Association. The completion date for the sale shall be 30 days from the date of exercise of the option or such other date as the parties may agree on. If Buyer has in turn sold to his tenant or another buyer, Seller will cooperate to achieve a simultaneous closing with one transfer of land.
"

This clause is from Barry`s Option`s template. Not sure if this is what Judy was refering too.

Antay

Thank you Antay

Yes this is exactly what i was refering to. My apologies for the confusion.

Judy Green
403 998-1604

 

[JudyGreen]

QUOTE (Dan_Eisenhauer @ Dec 19 2009, 04:45 PM) For those of us unfamiliar with that agreement, what does Section 5 say?

If you sell that agreement, when signed, to another investor, sure, you can collect a finder`s fee.


Hi Dan

Merry Christmas

Are their any other ways of putting a buyer and seller together other then an option agreement?

Thanks
Judy

 

[Dan_Eisenhauer]

There are two other methods I can think of:

1) The traditional sale
2) An Agreement For Sale... similar to an option, but is, in fact, a contract to sell (with a delayed closing date), provided all terms of the contract are met.

ie. As in an option, with an AFS, the Buyer generally pays the Seller a given amount of money each month that builds up the down payment. The Buyer probably has an equitable interest in the property, which he/she should not have with a properly worded option agreement.

 

[antaynguy]

Hi Judy,

What is exactly that the seller`s lawyer have problem with section "5"?

Thanks!

Antay

 

[BarryMcGuire]

Hello to all. I too was wondering what the sellers lawyers issue was with clause number five? There are three thoughts in that clause:
1. That the deal would close according to the most current version of the AREA contract
2. The closing day would be 30 days after exercise of the option, and probably most significantly,
3. That the seller would cooperate and do a simultaneous closing if the buyer had sold to his tenant or to another buyer
if there is any chance of knowing what the sellers lawyers objection was, that would be great to know and perhaps we can improve the document. As we all know these are just forms. The two versions of a very basic option are drafted from the perspectives of being the buyer of the option or the seller of the option. For instance, the sellers version of the option doesn`t have the last part of clause number five as shown in paragraph 3 above. Why? Because it would be better for you as a seller to have to deal only with the person you have sold the option to and not with his tenant or some other buyer. On the other hand, if you are the buyer of the option as Judy was, then it`s better for you to have the clause. It`s all a matter of knowing what you want to do with the property and negotiating the best deal you can.

Cheers

Barry

 

[jasonheisler]

Hi Judy,

I ran into a similar problem when dealing with options and the sellers lawyer. I am interested to see what the seller`s lawyer reasoning is. It might help if you sit down with the vendor and help her understand what section 5 means, as she may not understand it completely and maybe her laywer didn`t explain it to her. If it is a good deal, maybe it is worth putting a higher amount down for the option, it will show the vendor you are serious about purchasing the home and maybe cause her to forget about her lawyer`s advice. Just a thought. Good Luck!!

 

[RedDeerWilliam]

QUOTE (JudyGreen @ Dec 19 2009, 04:42 PM)

She brought it to her lawyer & The lawyer advised her not to sign the agreement due to section 5 in the agreement.

Like Jason H. mentions in his post, it could just be a case of the lawyer not being familiar with this type of agreement and the confused or unfamiliar mind will have the tendency to say "No! Don`t do it!" even if it`s a lawyer!

Unfortunately there are some lawyers out there who just aren`t familiar with everything that they should be! I`m starting to think that `Agreements For Sale` are not that commonly used in residential real estate legal world! I know my lawyer has outright said to me that he hates `Agreements For Sale` because from his experience they don`t seem to ever work! It`s just one lawyer`s opinion though.

 

[BarryMcGuire]

William, you are right, Agreements for Sale (AFS) are NOT common today. As mentioned in my Ron LeGrande presentation, and at `Deal-Ready Documents Focus Workshop`, the AFS was common years ago when mortgages were impossible to get unless you a crazy deposit like 50%! Very few buyers had that kind of a deposit so if sellers wanted to sell they had to provide seller financing. That meant a vendor take back mortgage or an AFS. Many sellers were more comfortable with the AFS because title remained in their name as opposed to the transfer of title that you get with a VTB. With the advent of CMHC and changes to the Bank Act, deposits went from 50% to 0% a few years ago, ( they are back to a minimum of 5% now). Who needs an AFS when deposits are low and interest rates are at a historical low?

The result is that many younger and even middle-age lawyers are unfamiliar with the AFS concept. Nevertheless it exists with a long and solid pedigree in AB. Our job is to be familiar with the concept, and to be able to explain how it works and the numerous benefits and advantages.

Happy New Year to all

Barry

 

[JudyGreen]

QUOTE (BarryMcGuire @ Dec 31 2009, 03:36 PM) William, you are right, Agreements for Sale (AFS) are NOT common today. As mentioned in my Ron LeGrande presentation, and at `Deal-Ready Documents Focus Workshop`, the AFS was common years ago when mortgages were impossible to get unless you a crazy deposit like 50%! Very few buyers had that kind of a deposit so if sellers wanted to sell they had to provide seller financing. That meant a vendor take back mortgage or an AFS. Many sellers were more comfortable with the AFS because title remained in their name as opposed to the transfer of title that you get with a VTB. With the advent of CMHC and changes to the Bank Act, deposits went from 50% to 0% a few years ago, ( they are back to a minimum of 5% now). Who needs an AFS when deposits are low and interest rates are at a historical low?

The result is that many younger and even middle-age lawyers are unfamiliar with the AFS concept. Nevertheless it exists with a long and solid pedigree in AB. Our job is to be familiar with the concept, and to be able to explain how it works and the numerous benefits and advantages.

Happy New Year to all

Barry

Thanks Very Much Everyone

I Appreciate all of your time and Knowlege

Although that deal had fallen through, we are more educated and onto the next ones

Judy GReen
403 998-1604