Option to Lease/Option contract Critique
I have a seller with fairly low equity in a growing area of a suburb nearby. She really needs help and the only theoretical way I see it is through a lease option, then assigning to a tenant buyer. The margins are too small for a typical wholesale and market rents aren't high enough to cashflow well as a buy & hold investment for my own portfolio. Thus, I don't want to give her an offer for my own portfolio. I've been researching option contracts and even used some verbiage from the "letter of intent" from Brian Gibbons in the "file place". I understand that most of you aren't attorneys and would like to have it reviewed by mine, I just can't get in until next week. Here's the contract as I've written it thus far. Please critique it and especially if you're an attorney please let me know if you feel it is safe to use. Or, should I just use the "Letter of Intent"? Mr. Gibbons? Thank you all.
Option to, Lease with Option to Purchase
This Option Agreement is made between __________________________, (hereinafter referred to as the Landlord) and ______________________________ and/or assigns, (hereinafter referred to as the Tenant).
For consideration in the amount of $__10____________, the Landlord agrees to grant an option to, lease with option to purchase, to the Tenant, the land and improvements known as: ___________________________________________________.
Lease and Option to Purchase would include but not be limited to the following:
Purchase price $_____________
Lease and option period of _________months
Lease rate of $___________per month
Lease deposit of $__________ to be held in until the option expires, is extended, or is exercised.
Option fee $____________ to be first paid toward title search, document recording, and any associated fees. Then paid directly to any lien holders in amounts necessary to bring current any debts associated with the property. Any proceeds leftover shall go to Landlord.
Tenant shall have the right to sublet the property.
Upon agreement this option will begin on _______________________, 20____ and end on _____________________, 20_____.
Landlord grants Tenant access to the above property for showing to prospective buyers, contractors, partners, and/or appraisers during the option period.
Upon Tenant exercising of this option, both parties agree to move forward with the necessary Lease and Option to Purchase agreements.
If the Tenant elects to exercise his right to purchase the aforementioned property, the ________________________ will pay all closing costs associated with the sale.
Landlord understands that Tenant is acting as a principle in this transaction and is not working as a real estate broker or agent representing anyone other than himself in this transaction.
Notice of intent to assign:Tenant hereby discloses and the Landlord hereby understands and acknowledges that the Tenant intends to assign its interest in this option, or it’s interest in the lease and option subsequent to this document. The Tenant shall have the absolute right, but not the obligation to assign its interest in this agreement or any subsequent agreements between the Landlord and Tenant.
This document is not a guarantee of tenancy or purchase. It simply grants the Tenant or its Assignee the right to lease with an option to purchase the property. If you do no understand this document, do not sign it without first consulting an attorney or an agent.
Tenant: Date:
Landlord: Date:
Landlord: Date: