Posted by
Candy McJunkins

Are you required to put up money in for the option ?

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Are you required to put up money in for the option ?

By Candy McJunkins   
Posted on Feb 04, 2017 in Topic: Home Buying
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Asked by: Consumer
Posted: 2 months ago
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Diamond
Darby Grimmett
about 2 months ago
Hi Candy,

This is a great question!

The answer is "yes", you have to put up consideration (money) IF you want an Option Period (Termination Period - unrestricted right to terminate the contract). Specifically, Paragraph 23 of the contract provides direction on this Termination Period and the Option Fee. Please note, of extreme importance, is that in order to have this unrestricted right to terminate the contract (by giving written notice of termination to the Seller before 5p on last day of Option Period, local time where the Property is located), you HAVE to pay the Option Fee specified in this paragraph to the Seller within 3 days after the effective date of the contract. This means, delivering directly to Seller or to Listing Broker's office and getting page 9 receipted on the contract showing it was delivered. I can not stress this delivery enough (as with all timelines and dates in the contract).

The amount of Option Fee, number of days in the Option Period and whether or not the Option Fee is credited to Sales Price at closing is all negotiable (as all other terms of the contract are). Note, the Option Fee WILL NOT be refunded to the Buyer if the contract terminates for whatever reason.

That being said, some people do not elect to have an Option Period. Thus, no consideration would be given and the unrestricted right to terminate is waived. This is not advisable unless you are completely comfortable with accepting the property "as-is."

Feel free to reach out if you have any additional questions, I'm always happy to help and provide guidance!

Darby Grimmett / KW / darby@darbygrimmett.com / 936-827-9217


about 2 months ago
Bronze
Krystal Huhn
about 1 month ago
Hi Candy,
The option money is necessary if you would like a period of time to have inspections, contractors etc out to see the property you would like to purchase. This shows the seller that you are serious and gives them a protection since they are taking their home off the market because you have said you are interested in buying it. The amount of option money and the length of the option is all negotiable.

Krystal Huhn
Stanfield Properties


about 1 month ago
Diamond
Francois Delille
about 1 month ago
Candy,
Yes 'consideration' is needed for the option to be valid. $1 is enough consideration. Some agents make the mistake of putting 0, then the option is not valid, i.e. there is no option period.


about 1 month ago
Bronze
Cuong Le
about 1 month ago
Short answer is yes. The main option fee must be paid or there is no option period. There must be at least consideration for the fee (at least $1 and up). Paragraph 23's specific language would say the option paragraph is not even part of the contract unless buyer pays the option fee within the 3 calendar days (not business) to the seller or listing agent.

Many agents drop off the earnest and option fee to the title company (title shouldn't take option fee). It is the responsibility of the buyer's agent to get it to the right party. If title forgets or listing agent/seller don't get the option fee in the 3 day window, buyer is out of luck. Hope this helps and feel free to reach out to the community with any other questions.


Source:


Texas Real Estate Contracts 2016-2017 - James Wiedemer

about 1 month ago
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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