Can you buy and sell an option on the same day?

Question

I have two questions about getting an option on a property:

1) When you buy an option on a property, how long does it normally take to register the memorandum with the county?

2) Is it possible to get an option on a property and sell/assign it to another investor on the very same day?

Thanks,

Brandon

Roy N. · Answer

Account Closed

In theory, I suppose it is possible, but unlike equity options or futures contracts, where there is a secondary market, the few real estate options we have purchase or sold have been non-transferrable.

Account Closed · Answer

Thanks guys.

Even though the memorandum can take a while to show up on public records on a computer search, this can normally be verified by phone by simply calling the county, correct?

I am looking to buy an option in another state and immediately turn around and assign it to a local investor.

Account Closed · Answer

@Roy N.

Do you think it's an industry standard for an option to be non-transferable? As a seller of an option, is there a specific reason you would want it to be non-transferable?

Also, what about my first question about registering the memorandum with the county?

Thanks!

Roy N. · Answer

The answer to your first question about registering the option on title is going to be dependent upon the jurisdiction in which you operate.   I do not know the process for North Carolina.

Typically when we sell an option on a property it is to someone who is currently, or about to become, a tenant.   We sell them an option on the property in which they reside to provide them with a known price and timeline they can use to both save a down payment and arrange financing.   We have no interest in them turning around and selling the option to a third-party, so we make it non-transferrable.

We also have used options to acquire properties.  As an example, there is property located between two of our student houses which is owner occupied, but the owner is thinking about downsizing.  We have purchased an option which grants us exclusivity to purchase the property at a pre-defined amount for a set period of time.  Naturally, the owner does not want us selling this option to a third-party, so it too is non-transferrable.

Jeff Rabinowitz · Answer

In many counties you can appear in person and record your memorandum on the spot. There will be a delay for it to show in the public records on a computer search which will vary. (Near me it may take 6 months for one county to post and a couple weeks for another.) I am not a lawyer and know nothing about N.C. law but if the option were drafted correctly (consult a local attorney) you should be able to assign it. Purchase agreements and mortgages are different vehicles but those can be assigned easily. It should be possible to assign the option the same day. I have purchased contracts from wholesalers within a few days of them being executed before. The fastest I secured a purchase agreement for a single family house was a few hours after it was executed. This was secured verbally but the paperwork which was signed several days later reflected all the details of the verbal agreement.