Troy Treleaven - Straight Options

Author: Troy Treleaven, Straight Options

Table of Contents

...........................................................................................................Simple Forward 2

.......................................................................................................Straight Optioning 3

......................................................................................................What is an Option? 4

........................................................................So why Should I Give you an Option? 5

....................................................................................What is valuable to an owner? 5

...........................................................................................................Some Examples 5

...................................................................Step – By – Step to Optioning a Property 7

................................................................................Step 1 – Finding a Property 7

...................................................................................Step 2 – Finding a Buyer 11

.......................................................................................Dealing with the Legalities 12

............................................................................................What is an Assignment? 13

..................................................................................What makes an Option Legal? 14

................................................................Non Real Estate Applications for Options 16

...................................................................................................................Summary 17

.........................................................Steps to Profit using Options to Purchase 17

............................................................................................Appendix ‘A' Q & A 18

..............................................................................Appendix ‘B’ – Possible Clauses 21

Appendix ‘B’ Possible Clauses…………………………………………… 50

Straight Options of 23

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StraightOptions.com. Copy Right 2003. All Right Reserved.

Straight Options

http://www.straightoptions.com/



Straight Options

Simple Forward

What do I want to accomplish in this e-book? Very simply, I want the following to be possible

for people who read, study and apply the principles in this e-book:

• Inspiration to go out and do “Optioning”

• A sense of “this is exciting” and “I can do this”

• A step-by-step guide that can be easily followed by the practitioner

• A sense of “mind-expansion” with all of the possibilities Straight Options can open

up for additional income streams

• An e-book that will cause the reader to tell others to buy the book because of its

completeness, value and practicality

• Easily arranged and catalogued so they can refer back to it easily in the future

A World of Big Money with Little Risk – Yeah Right!

What if there was a way to invest in Risk Free Investments and make large sums of money

and cash flow at the same time? When I hear “Big Money” and “Risk Free” together I

immediately become skeptical. Most investment opportunities that the average person sees have

“Big Money, High Risk” or “little money, low risk”. If we invest in most mutual funds, for

example, it is not very risky, but the return is not very strong either.

Is it possible that the strange cousins, “Big Money, Low Risk” can come together?

Here is an example of a deal I did recently. A gentleman called me who was the

acquaintance of a customer I had helped with a Lease Option deal. What I had done was helped

a couple solve a Real Estate Problem. (Their problem was that their house had been on the

market for 6 months, no buyers (in a hot market) they had moved out of town and were making 2

house payments, on their new house, and this one hadn’t sold. I used an Option combined with a

Lease, and stopped their negative cash flow, gave myself $100 per month positive cash flow, and

allowed them to sell their house for the price they wanted and gave me $14,000 when the house

closed.)


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Now, back to the story about their acquaintance. He called me and asked if I could help

him solve a Real Estate problem he had. He owned a rental property and had a tenant that had

stopped paying rent and utilities and was not returning his phone calls. I found out that this

landlord just wanted out of this situation, but was paying the mortgage on this house out of his

own pocket every month. He also had to deal with the utility companies for the unpaid bills. I

found out he owed $55 000 on this house that had a market value of $90 000.

I said, “To solve this problem, I’d like to buy your house from you and I will only pay you

$5000 over what you owe on this house.”

He didn’t think long and said, “OK, I just want rid of this problem.”

I offered him an Option to Purchase his house for $60 000, with a $1 option deposit. I also

got Power of Attorney from him to deal with the mortgage company, the utilities, the taxes, and

the TENANT. I talked to the tenant and offered him some money to move out ($500) which he

took enthusiastically. Within 2 weeks I had a vacant house. After doing some very minimal clean

up (cleaned the carpets, some paint) I called up a local Real Estate Company and listed the house.

Within 2 weeks I had a signed offer to purchase for $89,000, from me. Remember, I don’t own

this house, I just have an Option to Buy. I called up the Seller and said, “Its time for me to buy!”

I bought the house from him on a Tuesday morning and sold it Tuesday afternoon to MY buyer. I

pocketed, $26,900 after my pay-off money and closing costs. Not bad for a few hours of clean-up

work and calling an agent.

When you enter the world of the rich, this is the world you see. We are going to look

specifically at one Technique and Mindset that can accomplish the “Big Money, Low Risk” feat

that the average person doesn’t know much about, and much less thinks is possible. Right now,

suspend your skepticism, and prepare for the possibility that there is something that you don’t

have to be extremely rich to take advantage of. To me, skepticism is healthy. It’s essential for our

Physical and Financial survival. Skepticism says, prove it to me and I’ll believe it. Cynicism is

much different. Cynicism says, it’s not possible and I don’t even want to entertain the possibility.

In the world of Creative Real Estate (that few rarely know about) is the possibility of Big Money

with Little Risk. Let’s Get to the Money.

Straight Optioning

For most people, Real Estate intimidates because getting the financing is a major obstacle.

Excuses like having a poor credit rating, a certain income level, lack of down payment, a home

mortgage already, new to country etc. prevent the average person from getting started in

investing. None of things are “real” reasons for not getting into investing. It is the “belief” that

these things hold a person back is the real reason. Even if you have these “beliefs” you can still

succeed with Straight Options.

There’s so much talk and literature these days in the Creative Real Estate world on Lease

Options that to talk about Straight Options can cause some confusion in the mind of the Investor.

Isn’t an Option just a part of a process to do a Lease Option Agreement? Yes, but it is a tool that


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has much greater power than we give it at first blush. A straight option has the power to control

any piece of real estate and any other asset (i.e. something of value) for that matter. It gives one

the ability to manipulate and manage an asset without having to go through the process of

ownership – that process avoids the expense of ownership too. In this book we will focus mainly

on Optioning Real Estate but we will end the discussion with other assets that can be optioned

and the great sums of money to be made there.

What is an Option?

An Option is a legal right to purchase an asset at a specified date for a specified amount in

the future. An Option, simply, is control over an asset for a specified time. In this book, we will

mainly refer to controlling Real Estate. This control can involve selling the property, marketing

the property, fixing the property, fixing the zoning, advertising the property and much more

without having an Agents license. Having an Option gives you the power to do many things

without necessarily owning the asset itself.

The Option is an asset in itself. Think of this constantly throughout the book. An Option to Purchase is a contract that has

inherent value. Like anything of value, it can be sold, assigned, leased and generally used to

make you money. Get an Option on as many things as you can, any kind of asset – Cars, boats,

planes, stocks, currency, buildings, inventory, intellectual property, internet web-sites etc. When

you get an Option – you get Control. Control in our Free Market system is power. If you control

something that has value, people will pay you money in various forms for access to that thing.

The most obvious and most well know form of control is Ownership. We own our cars, our

furniture, our appliances, our homes, our tools, our computers, our jobs, and on and on.

Ownership is a very definite and clear form of control. We have laws that contribute to our notion

of ownership. Most people believe that unless they “own” something they have no right to that

thing. So much focus is put on “owning” things, that most average citizens believe that they have

to “own” something for it to be valuable to them.

Enter the Option. With an Option, we have a legal right to do what we want with

something of value, within a certain period of time (provided you have agreement from the

seller). An option is a legal contract that provides us with a chance to make money with an asset

owned by someone else. In fact, an option limits what the owner can do with the asset once the

option is ours. An option is power, and the more you and I can begin thinking from this place, we

will unlock a virtual fortune for ourselves. We can control anything without having to own it.

The only condition is that the owner must provide an Option to Purchase, to us.

Why would an owner give us this right? If we can provide a service valuable to the owner,

or demonstrate an Intention to do something valuable for the owner, they will gladly give us that

right.


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So why Should I Give you an Option?

What is valuable to an owner?

An owner may first and foremost want his property sold. This is the bottom-line. This is a

common request and a fair one. Why would an owner want to give someone an OPTION to buy

rather than just a sale? For a number of reasons:

! Maybe he hadn’t thought of selling but if you could get him a price that he

wants sometime in the future, he will sell his property at that price.

! Maybe he has been dealing with an agent and the process has been very slow

and not much action is occurring, your offer to have an Option to buy might

mean a possible sale for this person!

! Maybe this person believes you have more resources to sell the property than

he does (knowledge, contacts, marketing tools), and if you can do it cheaper

and more efficiently why not?

! Maybe the seller doesn’t want to haggle with Agents or buyers and is happy

for the peace of mind of just having you agree on a fair price for the property,

in this way you will do all the negotiations and haggling on their behalf.

! Maybe the property has been slow selling and you offer a fair price but need

time to get the financing together. An Option to Purchase will give the seller

a greater sense of security that someone is interested in his property.

! An out of town or absentee owner may want to sell the property and you can

help out selling the property by holding an option to buy, you do all the

marketing and negotiating on their behalf.

! A seller may want full market price and not want to pay an agents’ fees, so

you could give the seller nearly his full asking price with an option to buy.

! And on and on….

Some ExamplesLet’s look at some examples of where options can be used and then we will look at how to

do one.

Example 1

A couple knows that you buy real estate. Their house has been on the market for many

weeks, listed with an agent, with no serious inquiries. The listing expires. The house is nice, lots

of upgrades, but this area is not the hottest selling area for some reason. This couple sees your ad

that you Buy Houses and calls you. They say, “Will you buy my house, I’ll give you a good

price?” You say, okay. You check out comparable houses and offer them an Option to Purchase

Contract at least $15 000 below the other comparable houses. You lock in an option price at $195

000 (assuming market is $210 000 - $215 000). You run an ad, “Sacrifice Sale. Nice $215 000

house for $205 000.” (You might add to this deal that you will help with financing or not, its your

choice.) You screen a number of prospective buyers for you, show the house, and make a sale

happen between you and this new buyer. The seller had no hassles negotiating with a RE agent

and buyers, you took care of that. They knew what their house would sell for because you put it


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down in the Option to Purchase Contract. Your seller got their house sold faster because of your

creative advertising. You get the difference at closing. Instead of them giving the 6%

commission to the Realtor, you get approximately the same amount when you deduct the closing

costs and the classified ad.

Your Option to Buy Price $195 000

You Sell for $210 000

Your Profit $15 000

(less closing costs, ad, Option Consideration)

Example 2

Sally Seller has a property and needs to move in the next 3 months. She responds to an ad

you have run in the newspaper, something like, “I buy real estate, call me before you call an

agent. 555-555-5555.” You see her house, nice house, good shape, no major repairs (if any)

needed. You offer her a price just below market rates for similar houses in this area of a similar

condition. Market is 115 000, you offer her 105 000. Your reasoning is that no agent will be

involved so there is no fee for them and the seller can rest assured that they will get this price, no

more haggling necessary. She agrees. You write up an Option to Purchase Contract for the Price

of $105 000 and you give her Option Consideration of $10 to make the contract legal (more on

this later). You can turn around and sell the house for $115 000 to a buyer that you have ready.

If the market will bear, you can even sell it for $125 000 by offering terms or a 2nd

Mortgage to a potential buyer. Here’s how. You run an ad, “No Money Down. Nice house, good

area, 3/2 etc…” The No Money Down is the most important part. You will receive a lot of calls.

Some will not qualify for various reasons, mainly poor credit, but you will get some good calls as

well. You carefully screen these prospective Buyers. When they fit your criteria, you show them

the house and offer to sell it to them for $125 000. They will put no money down and you will

hold back a 2nd mortgage for 5 – 10%. When they get the financing, you will own a 2nd mortgage

for $12 500 (assuming you put down 10%) and get $7500 less closing costs of approx $1500.

That 2nd mortgage at a 12% interest rate will pay you $131.65 for 25 years or until they pay it off.

Not bad for 2 ads and $10 option consideration!

Your Purchase Price $105 000

Money down $10

Your Selling Price $125 000

Cash at Close $7500 (less closing)

2nd mortgage note $12 500 ($131.65/month for 25 years)

Your Profit $20 000

(less closing, ad, Option consideration, plus interest over 25 years)

Example 3

You find a run-down property, a definite “fixer-upper”. The owner can’t sell it, doesn’t

have money to fix it, and you don’t want to acquire it before you do the fix-up. The After fix-up


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Market price is $120 000, but you know (through an appraisal) that the current price is only $85

000 due to the poor condition of this property. You give the owner an Option to Purchase

Contract for 6 months at the Purchase Price of $85 000, and a Lease Agreement for 6 months, and

you begin doing the fix-up. The only money you put down out of your pocket is the Option

Consideration ($1) and the monthly carrying costs – mortgage, taxes, insurance and utilities, and

your Rehabbing fees. You fix up the property. Within 6 months, you find a buyer for this

property and flip it to them for the Fixed-up Price ($120 000). If you can persuade the seller, you

may not even have to pay the monthly carrying costs, depending on their motivation, but lets

assume you do have to pay.

Option to Buy Price $85 000

Monthly Mortgage, Taxes, Insurance $750/month (6)

Fix-up Costs $10 000

Total costs to fix and carry $14 500

Sell Price $120 000

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Profit at close $20 500

Essentially, this profit was gained without having to outlay the $85 000 Purchase price, no

new mortgage, only the carrying costs and the fix-up costs. Someone handy could easily work

this kind of deal on weekends and having another job. If your not handy, just add labour costs to

your fix-up costs. Still, a tidy profit for just controlling a broken down property. If you combine

the Option with the Lease, this is known popularly as a “Lease Option” or as a “Lease to

Purchase”. There is much written on this already so I won’t elaborate on this method, but check

out the web-site for a full explanation. This specific example is known as a “fixer-upper Lease

Option”. We will cover the Lease Option technique in great detail at the web site and in other e-

books. The important part is the control you gained using the Option to Purchase Contract.

This option tool is incredibly valuable. Let’s look at the nuts and bolts of the first two

transactions discussed. How do we do it? What documents do we need? What are the details?

Lets go into that now.

Step – By – Step to Optioning a Property

Step 1 – Finding a Property

How do you find owners willing to Option their property to you? Is everyone out there a

prospect? Why would someone be willing to do this?

Frankly, the Optioning concept is not very popular in Real Estate transactions. The general

public who sell their house have never heard of it. The typical method everybody knows to sell

his or her home is to call a Real Estate company and deal with a Real Estate Agent. Even Real

Estate Agents aren’t very familiar with this method. Just last week, I proposed this to an agent


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and he said, “In 28 years I haven’t seen it done this way” and he wasn’t being complementary.

Using an agent is so highly marketed that most people don’t know there is any other way. The

problem is, that many people have situations that are not best served by the services of a real

estate agent. Many people today who are selling their homes, have little or no equity in their

house due to the 5% down payment rule that is now possible in many jurisdictions. It would not

make sense for many sellers to sell their house because when you consider the market value of

their home, the amount on their mortgage, the Realtor fees and closing costs, the seller will often

break-even or lose money on the sale of their home. Other times, a seller needs a fast sale and

cannot be accommodated by the services of a realtor in the time frame required. Sometimes, if a

seller has moved to another house for whatever reason, they can’t afford two payments on two

houses. This is a great situation for a Lease Option. Sometimes the seller doesn’t want the

headache and hassles of constant back and forth with buyers and agents haggling over purchase

price. There are times when a seller doesn’t even want to sell, but if the right price is offered to

them, they can change their minds fairly quickly.

So, how do we find these people? In our experience, the best way is to let the world know that

“you buy houses”. You may be saying, HOLD ON, I can’t afford to buy a house in my situation.

I don’t have the money, the credit, experience etc. Remember, you won’t necessarily “buy” the

house; you will “control” it. You will not need much if any of your own money, or credit, and this

book will give you the knowledge you need. So back to, “How do I find the kind of people who

will Option their house to me?” You can communicate this through a newspaper ad, a sign,

business cards, letters, postcards, flyers, friends, relatives, acquaintances, and professionals in the

industry. You need to let the world know that you are a Real Estate Investor and that you Buy

Real Estate. For more on communicating to the world, see the e-book, “Being an Investor: The

Surefire Plan for Investing and Business Success.”

Let’s say you run an ad. For the method of Optioning mainly discussed here, an ad similar

to the following will work.

We BUY Real Estate

Any price, Any Area

No Commissions or Fees

Call us before you call an Agent

555-555-5555

You can run this ad in the real estate section of your local paper. Often it will go in the

Real Estate Wanted section, or in the Real Estate for Sale section. We recommend running it for a

minimum of 1 week and at most 2 weeks. Depending on the time of year, you may get many

calls or just a few. We usually find that this kind of ad gives us about a month of work. Some of

the leads will be strong most will not be strong. Many people will be intrigued with the No

Commissions/Fees and that you are not an Agent. They may not even think that such a person

exists. Now you need to qualify the leads.


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Qualifying – When people call, they will often ask you what exactly it is that you do. Some will

ask you if you are an agent. Some will want the details of your business. Take control politely

and firmly right off the bat. Say something like, “Yes, we do what the ad says, we buy houses in

any area at a good price. We make the process easy. Do you have a property for sale?” At this

point they will answer yes or no. Now begin asking them some questions about their property.

1. Where is it? (Get the address)

2. How many bedrooms? Baths? Square footage? # of stories? Garage? Roof? Furnace?

Heating? Etc.

3. It sounds like a really nice place. (Really important to build rapport when asking) Do

you mind if I ask why you are selling?

4. Do you have a mortgage on the property? If so, how much? Interest Rate? Years left?

Are you current on payments? If they ask why you are asking so many questions say,

“One of the ways I buy houses is to assume the mortgage. Do you know if it is

assumable?” This usually helps get around this objection.

5. What are the taxes? How much is your insurance Payment? Utilities?

6. Is there anything I should know about this property that we haven’t talked about yet?

Any issues going on? Surprises?

7. Is it listed with an agent? If so, how long? Have you talked to anyone else about

selling it?

8. How soon do you need to sell?

9. How much do you want for the house? Would it appraise for that?

10. Are you open to taking payments? If I give you a fair market price for your home and

close quickly will you sell it to me without a lot of haggling or do you want the highest

possible price you can get no matter how long it takes?

After you have got most of this information, begin deciding if this is the kind of place that you

would want to go out and visit. Remember, your time is very valuable and you don’t want to go

driving around the country looking at a whole bunch of properties that won’t fit your criteria. The

things you are listening for (see e-book Investor Plan and Mindset on the StraightOptions.com

web site) are seller motivation. Do they really want rid of this headache? Is getting the highest

possible price more important than fair price with a quicker close? Do they seem willing to work

with you – reasonable people or are they guarded?

If you believe that they are willing to deal than you can book an appointment to go out and see the

property. If you sense they will be a pain in the butt, or just aren’t motivated then pass. Many

times it’s not worth the aggravation to see a place where the people are just difficult and/or not

motivated. Remember, with the kind of Real Estate we are doing here, Motivation is not

necessarily the primary deciding factor. In most creative Real Estate, being a Motivated seller is

by far the most important factor to getting a good price and good terms. Motivation (read

desperation) is important but if they just want a good price without a lot of haggling, you have a

good prospect. If they want you to take the property off their hands with few questions asked,


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than you have a great prospect. Either way, when you are dealing with Optioning either scenario

will do. Especially in hot Real Estate Markets, Optioning is an ideal tool to make money in Real

Estate. It is probably the best. Often “Lease Options” that require a long holding period – 1 year

to 5 years or more, will not be a popular or feasible method in a hot market. This is not to say

they aren’t out there – very much so – but pure Optioning will be much easier to do and yield

some excellent returns.

Rapport Building

When you are dealing with the seller, spend some time and build some trust. Trust cannot be

faked. Someone either trusts you or they do not. Being honest and straightforward and kind is

the best way to build trust. Many people think they are being honest by telling someone all the

bad things. They start their sentences with, “Honestly…” Usually what is coming is just the

honest bad news, not the honest good news. This is more just an easy way of giving bad news.

Being Blunt is not always Honesty. Instead, truthfully find and point out the negative features of

the property AND the good aspects of the property.

When it comes to broaching the subject of whether you will Option the Property, use

another technique, or walk away, you again need to be honest. Sometimes, you may know

immediately, that you can’t do anything with this property. Often, “someone else” can do

something with the property, but you can’t. If you don’t want anymore to do with the property

tell them. Other times, you may think its possible to do something with the property, but YOU

don’t have the expertise to do it. It might be using a Creative Real Estate technique that you are

not very familiar with. Say, “I’ll need a bit of time to process the best plan for your house, please

give me a day or so.” Then use your resources to figure something out or bring another investor

into the deal.

If the property does look like an ideal candidate for your Optioning Technique say

something like, “I’d like to buy your property, but I need to get some resources together before I

do (Or) I want this property but need to explore my financing options, and it may take a bit of

time. Because I don’t want to lose this opportunity, I’d like to buy an Option to Purchase on this

property. I’ll give you a contract at $XXXX.XX price, and I’ll do my necessary research to

complete this sale. It might take me a month or two at the most (only say this if it will) or less

time to complete this, but if I have an Option to Purchase, this will let you clearly know my

intentions to buy your house at $XXXX.XX price, and it will give me some time to take care of

things on my end.” If they have questions, answer them. See the appendix for Answers to

Questions about Optioning. For superior coaching of the Communication, Selling and

Relationship Skills to excel at investing, take the modern Dale Carnegie Course.

www.dalecarnegie.com

Now, we assume they have signed the contract, and you hold in your hands, a legitimate

Option to Purchase Contract. You now hold an asset of Value. This is where you can be creative


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in making money with this contract. For simplification purposes, we will look closely at only 1

way of liquidating this property. There are many ways that you will see outlined later.

Step 2 – Finding a Buyer

You can either find a buyer or you can find an investor. Let’s look at finding a standard

buyer first.

Run an ad in the paper, likely the Real Estate for Sale section. The ad should say something like:

NO MONEY DOWN!

Nice 3/2 house for Sale.

Garage, Air,…..

Owner will assist with Financing.

555-555-5555

This should get your phone ringing. You will undoubtedly get many more calls than your

previous ad. Many people are looking for this situation, and unfortunately there is a reason why.

They likely have some bad credit. Maybe a bankruptcy in the last 7 years, maybe poor payment

history etc, but whatever the story, the banks haven’t been able to get them a mortgage for some

reason. These people might be better prospects for Lease Options. A Lease Option can allow you

to rehabilitate their credit while they save for a Down Payment. These are not likely the people

who are ideal candidates for what you are offering. You are looking for some people who have

reasonably good credit (doesn’t have to be perfect, but pretty good) and who want help putting a

down payment together. Maybe they are first time homebuyers – IDEAL. These people can

likely qualify for a mortgage and Mortgage Insurance companies like CMHC (Canada) and GE

(Canada and US) and others, will allow them to put a small amount of money down and insure

the mortgage will be paid to the banks if the mortgage holder defaults.

You may be asking, “Why are these good candidates if they can’t come up with a Down

Payment?” These are people who are probably good bill-payers, but not savers. So, instead of

borrowing the down payment from a Relative or Friend, you will give it to them. “Hold on a

second.” I hear you saying, “I’m going to pay their down payment? I don’t have any money for

that! You’re crazy!” Wait just a second. You don’t need money. That’s right. You can put down

their down payment without using your own money.

Here’s how:

After screening through a lot of non-qualifiers – i.e. People with quite bad credit now –

You pick a few that seem reasonable. By the way, consider getting a membership with a credit

verification company like Rent Check or Rent Right to help you run Credit Checks on people. If

you plan on being in the Real Estate game, a membership with one of these companies is a good

resource to have. To save yourself money, you can get to know a good mortgage broker, who will


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run their credit for you, just call up a few in the phone book or ask a friend for a referral. They

will like you because you can provide them with valuable leads for their business. Just get the

info using one of your mortgage brokers standard Mortgage Application sheets, or have your

mortgage broker call them directly to get the info. Once you are sure that your prospective buyer

can qualify, you can now show them the property.

Arrange before hand with the seller acceptable times to view the property. Ideally, have

the seller go out for coffee or visiting friends during these times. This will minimize

uncomfortable questions from the potential buyer to the person you hold the Option with. Its not

impossible if they are there but its better. In a sense you will be doing some of the job of a real

estate agent but you are by no means a Real Estate Agent. You are going to buy this house,

unlike a realtor would. Otherwise, you can be categorized as an agent and then you open up a can

of worms that is not necessary. You get involved with Licensing Issues, Tax questions etc.

Show the property to the potential buyer. Get them excited.

Now meet with them at a coffee shop or someplace that you can be relatively undisturbed.

Let them know that they can buy it directly or that you will hold the financing for them. They

will ask you how. You say, “I’ll hold back a 5 – 10% mortgage to cover your down payment.

You get a first mortgage and I’ll make sure that you can buy this for no money down.” If you

have had them pre-approved for a mortgage with your mortgage broker, then it will be a piece of

cake. If they still need to get qualified, let your mortgage broker know what you intend to do and

have him do the qualification paperwork with you. Make sure with your buyer that you lock in a

price that is at least $10 000 over the price you have agreed on with the Original Seller. Make

sure that the price is not out of the range of possibility or appraisal range or the couple won’t get a

mortgage anyway. Good thing is, when you offer these terms to a Buyer, you can demand a

higher than average purchase price because you are offering a valuable service.

Dealing with the Legalities

What will happen is that your lawyer will write up the documents of closing indicating that

the 2nd seller (you in this case) will be holding back a mortgage. This will indicate to the Buyer’s

lawyer (and buyers) that you are taking care of their down payment. Sometimes the first

mortgage company will require that they see evidence of Down payment in the account before

authorizing funds. If this is the case, find out from your lawyer what he/she would like you to do.

They may not require that you show these funds, but if they do, here’s what you do. Find

someone to lend you some short-term money. This is called a Hard Money lender in some

circles. These people can put up a large amount of money for a short time, from a couple of days

to a few months. The interest rate on Hard Money is often very high. Another solution is to

borrow from someone’s line of credit and give them incentive by offering a part of the profit you

will make on the deal. Because you will be doing a Double Closing (more on this in a moment)


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you will have the money in and out of the bank account. This is just to show the lender that the

money for closing is there. Check with your lawyer on the details.

A Double Closing is when you close with two buyers on one day. In this case, you will

close the deal with the seller you have the Option to Purchase with, and your buyer will close

with you. Find a lawyer that is fully informed on how to do this. Some lawyers will tell you it

can’t be done. Find another because it can be done. If you and your Buyer and/or Seller can use

the same lawyer this simplifies this process. Not all will be comfortable with this arrangement

though, so make sure it is well planned in advance.

So, you coordinate all the Closings, the Second mortgage gets registered against the

property in your name. With the 2nd mortgage you are holding back, you have at least 3 choices:

1. Register the mortgage against the property and take the payments over time. 2. Sell the

mortgage to a note buyer and take cash (at a discount, read below) 3. Don’t register the mortgage

and just write it off. This means the buyer won’t actually make you payments, you’ll just write

the contract as though you were putting in the Down payment for them as a “gift of equity” or

something. Check with your lawyer.

Depending on what your financial goals are, one arrangement may be better than others. If

you are holding a 2nd mortgage, you can be a magnet for Note Buyers, who will buy your

Mortgage from you at a Discount. This means that if you have a 2nd mortgage for $10000, they

may offer you $8000 cash and buy the note from you. You get cash, sure its not $10 Grand, but

you created the money out of nothing except your knowledge. Pretty good profit I’d say. In any

case, you have successfully, made money on a property with under $100 of your own dollars and

hardly (if at all) owned the property.

What is an Assignment?

You can also do this deal by using an assignment method. In this case, instead of you

closing with the Buyer, you can simply “assign” your right to the Option to the buyer for a set fee.

This fee can be payable upon closing or prior to closing. Either way, this method eliminates the

need for a Double Closing, saves you legal costs, and paying Land Transfer Tax. To assign, make

sure that your option to purchase contract has an assignment clause. This might go as

follows…”The Optionee reserves the right to assign this contract to any person, company or

entity. This will release the Optionee of any liability or responsibility once released of the

contract.” (See sample provided in Appendix)

If you are not concerned about what your Buyer or Seller thinks about the purchase prices

they agree on, then Assignment is a great tool. On the other hand, sometimes one of the parties

may get their nose out of joint (ticked off, upset) if they know that the other party paid a price that

they deem unfair or unjustified. Double Closing prevents this because the deal is straight

between the buyer and the seller, and then the seller and the buyer. You need to use your

judgment.


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You can make some relatively quick and easy money if you use Options to quickly flip

properties to Investors. If all you want is a couple thousand to $10 000 or more, you can tie up

properties using an Option to Purchase contract, and then assign your contract to a buyer who has

some inventive ideas for the property. This is called “Bird-dogging” and is a great way to not

only get started in Real Estate but also to make quick money if you have another focus area for

your Real Estate. As you come across properties, if you find one that doesn’t fit your preference

for investing, you simply tie up the contract with the Option and make sure that you get an

Assignment Clause, and find someone who likes that type. See some of the Small Booklets that

are available on the web site (straightoptions.com) for more ways to work with Options.

What makes an Option Legal?

There are simple components that combine to make an Option legal.

1. It must be in writing. All Real Estate contracts must be in writing to be valid. Other types

of law allow verbal contracts, but not in the case of Real Estate. Use the form in this book

or another version to get a written version of your option.

2. It must have as much detail as possible outlining the Property Location. Make sure that

you have the Lot and Plan numbers or any Legal Description given for the property. You

can get this info from the Tax Assessment notice that the owner should have, or from the

original deed or mortgage documents. You can go to the Land Registry Office (Court

House) to find this if its not available. Just give the common address i.e. 123 Bobble

Street, and they will give you a piece of paper with the details on it. This might cost you a

few dollars for administrative fees.

3. The Option must have VALUABLE CONSIDERATION. This is the deposit that you

provide with the Option contract. Often this is non-refundable, unless you specify

differently. Consideration is what is exchanged with the Seller for your right to control the

property. Valuable is what is deemed valuable by the seller. It can be $1 (a token dollar),

$10, $24.23, $5000, a car, take out the sellers garbage, whatever. The consideration can be

anything and it should be indicated on the contract. If you are using money, use a cheque

so that when the seller cashes it, you will have proof that your consideration was

exchanged and accepted. If you use cash, get a receipt signed by the seller. You want to

make sure that you cover your bases to make it fully legal and above board.

4. The Option Contract must have a definite completion date, and performance dates. Dates

make Contracts valid. Make sure you indicate when the Option expires, and if you have a

specific date for closing the contract. One deal I saw recently, had no specific closing date.

When checking with a lawyer, he confirmed that it rendered the contract illegitimate and

was not enforceable. I recommend only specifying closing dates if you are absolutely,

absolutely sure you will close on that date. Otherwise, indicate that this is unknown at the

time of writing the contract. The Purchase and Sales Agreement is the best time for


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specifying closing dates. Try to negotiate with the seller, Options to Renew your option.

For example, if you have an Option to purchase for 60 days, include 2 rights to renew for

30 days at the end of the 60 days. This way, if you run into snags getting the Option sold

or the deal completed, you have some time built into the contract. If you have to ask for

Extensions, you can often lose your Option Deposit if the seller doesn’t agree or wants to

push you to complete the sale. Then all your work will be for nothing.

5. As much as possible, attempt to get a Right to Assign your contract. When you have this

privilege, you contract becomes much more valuable because now it can easily be sold.

You might want to sell it to another investor who has more expertise and/or time than you

to deal with this particular opportunity.

6. If you want to protect your Option to a higher degree, you might consider registering the

option on title. By getting a conveyancer or lawyer to register your option on the property

title at the county court house or the Land Registry Office, the property cannot be sold by

seller without dealing with your option first. This gives notice to the world that you have a

right to the property if it ever is in the process of being sold. If the seller wants to sell it

you have some negotiating power. You can take a pay-off for your option, whatever you

negotiate with the seller, or refuse and get the difference from the Option Price and Selling

Price at close.

Be creative in the terms with your seller. The great thing about a contract is that if both

parties agree on terms, you can put anything in the contract that you both agree on, provided it

doesn’t violate a state, provincial or federal law. Here are some examples:

1. Ask for an extended option period – 6 months to 10 years.

2. Make it a non-exclusive option i.e. If the seller is nervous about giving you an

Option to purchase in a hot market, say, if you find a buyer prior to me

exercising my option, I’ll claim no right to the option.

3. Make the Option Consideration something non-traditional i.e. make your

motorcycle consideration.

4. Ask for the right renew the option within a certain period of time

5. Give the seller a percentage of the profit you make from the deal as

consideration

6. With a Lease Option, sell back the option to the seller once you have a Tenant/

Buyer locked in at a higher price and monthly rental amount. Why not sell it for

a couple thousand dollars and a percentage of the equity at the end. Or sell it for

the first 4 months positive cash flow. Or if you like the owner’s lawn tractor,

offer to be compensated by that.

Not to sound too wacky, but stretch your imagination to all of the elements of the Option.

When you do, you will see applications for using an Option to Purchase contract, that won’t occur

to the everyday person, and make you a lot of money. If you read this book several times and let


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the material really sink in, you will begin getting insights that you can use to make practically any

deal work or work even better than the basics. Lets interact on the Straightoptions.com web site

with all the possible configurations for optioning. This can be one of the most stimulating

exercises I know of and we can open each others eyes to profits unlimited!!

Non Real Estate Applications for Options

As mentioned earlier in the book, any asset can be “optioned”. The stock market is a

common place for Options. Using a call or put Option, allows and investor to make money if the

stock goes up (call option) or down (put option). By registering a “Strike Price” against a stock,

when the stock hits that strike price within a specified period of time, the investor makes money,

without having to buy the stock itself, just the option.

Why not get an Option to purchase on your neighbor’s boat? One investor I know noticed

his neighbor had a For Sale sign on his boat for 5 months sitting in his driveway and wasn’t

selling. He asked his neighbor, “Could I have an Option to Buy your boat in 2 months?” The

neighbor said, “What are you talking about?” He said, “Can you give me the right to buy your

boat in 2 months at $12 000?” His neighbor said, “You want a RIGHT to buy my boat? Why

don’t you just buy it, I’ll give it to you for $12000, I’m asking $13 000?” The investor said, “I’m

not quite sure if I want to, I got to work out some financial things and then maybe I can.” So they

agreed and signed an Option to Purchase Contract. The neighbor kept the boat for sale in his

driveway. The investor, put an ad in a Cottage Country Newspaper, advertising a Boat for Sale,

the details and a price of $14 000. He got some calls, showed the boat, and got a buyer for $14

000. He made a clean $2000 on the transaction, and his neighbor was glad to get rid of it. By

being a Seller-Buyer Coordinator, we can make money by creatively marketing assets.

If there is an idea you have for something of value, that SOMEONE ELSE owns, why not

get an Option to Purchase it? This thing may not even be for sale (on the market), but if you can

tempt the owner with a good price or good terms, what does he have to lose by giving you an

Option to Buy it at that price and those terms? Look around you. What do you see that if you

owned it, you could make money by adding value to it? Let’s talk land (back to real estate again).

If you see a tract of land – a farmers field say, you offer the farmer a decent price with an Option

to Purchase in 12 months and he goes for it. In your mind, you know a developer who is looking

for something like this. You get permission to survey the land, change the zoning from

Agricultural to Residential, then sell you Option to the developer; you could make yourself a

pretty penny, by adding value through Re-zoning to the developer. You added your knowledge

and some legal classification and the developer gets a valuable piece of land to develop. The

farmer gets an above average price for his land, and he wasn’t even thinking of selling.

Let’s expand our mind. Intellectual property. A patent. A trademark. Software. Inventory in a

warehouse. Cash flow streams like: Notes Receivable, Mortgages, Lottery Winnings (in


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payments), Rent or Lease Payments, Lease Option Contracts (and many more Payment

Receivable type of instruments) are all available to you for an Option to Purchase Contract. Why

not overseas manufacturers who want access to your country’s market? By taking the Optioning

Concept, stretching it, you can use this tool to control and then profit from any kind of asset that

you can negotiate favourable price and/or terms with the owner. Opportunities are under your

nose right now, simply look around.

Another approach is to find out what someone wants (a buyer), what he is willing to pay,

set him up with a seller of that desired item and take a commission. Protect yourself with a

contract of course, but make money with other people’s stuff. Our Free Enterprise system is built

on adding value to products or services. Be it marketing, distribution, and legal alteration (ex.

Re-zoning), there are a multitude of ways you can take an expertise you have, and make it

profitable for you by adding value without having to own it. There is such an unlimited field here

its important to pick something that you know particularly well and focus your energies on

repackaging that. Take any asset, fix the appearance, the layout, the original purpose, the hidden

value, and connect a willing buyer.

By opening your mind to other applications of Options, you will see, infinitely more

possibilities for Real Estate. Option an Apartment building, rezone it Condo, then sell off the

units for more than the units would be valued at on their own in a traditional apartment building.

Option a hotel; examine the possibilities of making it a commercial office building or the other

way around. Option a warehouse; make it a hip apartment complex or condo complex. Study

trends like the aging baby boomers. Find suitable “potential” Seniors Housing, option it, and sell

your idea to investors who can turn this into reality.

Summary

Steps to Profit using Options to Purchase

1. Find a need.

2. Control the appropriate asset.

3. Protect your interests.

4. Sell your idea.

5. Consummate the deal.

6. Profit

Big Money, low risk. That was one of the promises at the beginning of this book. Big

money – this is determined by the individual. What one person considers Big, might not be big to

another. How big you go in Optioning, can be as small as a few thousand dollars or in the

millions and billions if you are talking major real estate deals. Donald Trump uses optioning to

do a large number of his deals. Read a few of his autobiographies for what he does to make these


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deals happen. If you think really big, you sometimes can access deals that the average investor

doesn’t think are possible.

In terms of risk, the risk is small if you negotiate right, and protect yourself properly.

Protection comes from defining your terms well, using clauses that can cover hidden problems,

and escape clauses that can allow you out of deals that go bad. The option consideration that you

give in exchange for the right to control the property will be in proportion to the sellers

motivation to sell, the length of the Option term, and the degree of involvement with the deal

(example –rezoning, fix-up etc.).

Amount of OPTION CONSIDERATION

=

Degree of Sellers Motivation

+

Length of Option Term

+

Degree of Involvement in the Deal

Bigger properties can be controlled for small option considerations if the seller is

appropriately motivated. This is why you want the type of people that call on your ads for higher

motivation. If the property is listed with an agent (seller may be less motivated) but you have a

spectacular idea for the property, you might require a higher option consideration and be willing

to pay it, if your payback will be big. Don’t option properties that expose you to too much risk

for too little return. You might want to start on small properties, and as your confidence and

knowledge grows, you will take on more and more aggressive projects. Funny thing is, the risk

will likely go down. If you work your mind around creative ways to meet needs between buyers

and sellers, this process will get easier and easier, and less and less risky.

So, just do it! Step 1; put an ad in the paper that you buy real estate. Use some method of

communicating to a lot of people what you do – Buy Real Estate. Once you get the word out, you

can begin scrutinizing deals and developing the real life information to need to really succeed at

Controlling Property that you don’t Own.

Enjoy real estate investing!

Appendix ‘A' Q & A

Answering Sellers and Buyers Questions about Option to Purchase.

1. What is an Option to Purchase? (Seller Question)

An Option to Purchase is a Right that you are giving me to buy your house at the amount we

have agreed is a fair price for both of us. This right can be for as long as we both agree is


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reasonable. As soon as I give you notice that I want to buy, we will take the terms we wrote in

the Option to Purchase Contract, and put them into the Agreement of Purchase and Sale and

go ahead and complete the sale. I need some time to get various issues together before I can

buy it.

2. How does this Option to Purchase benefit me? (Seller Question)

A number of ways: • I’m willing to give the price that you and I believe is fair on this house and put it

in writing. I can’t change my mind on the price. That means that you know the

price you’ll get, and there will be no games down the road. • You don’t have to pay a Real Estate agent a commission when you sell your

house. This means, you will get the price you are asking without having to

deduct 6% from the purchase price. You may get more for your house than your

neighbor who is selling down the street with a Real Estate agent. • You can still have the property listed with an agent (if you choose) and have me

out actively selling your property to others. This means, you’ll have two heads

selling your house, which raises your chances of selling the property sooner. • I’ll get you a higher than average price for your home and you don’t have to

worry about the irritating negotiation and haggling process. • Because I am a creative investor, I’ll get people looking at your house that the

average Real Estate Agent wouldn’t consider. This means you’ll get your sale

faster.

3. What happens if you don’t exercise your option and our contract expires? (Seller

Question)

If it expires, you have full control over the price and date of the sale again. If you like we can

write another Option to Purchase Contract at the end to keep me selling the property for you.

We can even build an Option to Renew clause into the contract so we can renew for a

specified period of time that works for both of us.

4. What if during the time of our contract, I find my own buyer who pays me a higher

price than it states on our Option to Purchase? (Seller Question)

In this case, the difference between our agreed upon price will go to me and be paid by the seller

at the closing table.

5. What if during the time of our contract, I find my own buyer who pays me a lower

price than it states on our Option to Purchase? (Seller Question)


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You will be required to pay me the difference at the closing table. We can negotiate if this is

the case though. For a fee, I’ll assign my Option to buy over to you. I think you’ll agree is fair

because of the time and money I’ll be putting in to sell this property on your behalf.

6. Why not just use a Conditional Sales Agreement instead of an Option to Purchase?

(Seller but usually a RE Agents question)

I don’t want to take the house off the market, but I want to have control over the house so that

if I find a buyer first, I’ll get compensated. If we have a Conditional Sale, it will reduce the

action that happens on your house by other parties. I also don’t want to play games with you.

When I say I’m going to buy, I’ll buy.

7. Do you own the house? (Buyer question)

I have control over the house and a right to buy it, which for all intents and purposes means I

own it. You will be buying the house from me, so treat it as though I am the seller now.

8. You are making some good money on this house, I don’t think this is fair? (Applies

when you are doing an Assignment instead of a Double Close and the Buyer and the

Seller both know the agreed upon prices.)

You are concerned about getting a fair price, and the price we have agreed on is fair, because

we both agreed when we signed the papers. You don’t see many of my hidden costs of

Marketing, Advertising, Office Expenses, my Time investment etc. which all went into

making this transaction possible.

9. I want more Option Consideration than $1. How do I know you are serious?

You are getting much more value than $1 for Option Consideration. You are getting an

aggressive potential buyer of your house. I only make money on this when I buy it and then

do something with this property. What’s more valuable than the dollar is the work that will

go into getting you the price you want for this property, which is my task. The dollar is to

make it legal. My commitment to you is the important part.

10. Why haven’t I heard of an Option to Purchase before? (seller question)

Probably because 90% of the Real Estate Industry makes a commission from selling your

house using very traditional means. Therefore, there are many fewer people like me

promoting non-traditional ways to transact Real Estate Deals, that tend to have terms more

favourable to Sellers and Buyers needs, or special situations that wouldn’t allow a Real Estate

Salesperson an opportunity to profit.


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11. What guarantee do I have that you will buy my house? (Seller Question)

Much like a real estate agent, there is no guarantee that he will sell it, nor that I will buy it.

What’s different here is that I have a higher chance of making this deal work because I

understand your unique situation and have the contacts to make this deal work.

Appendix ‘B’ – Possible Clauses

Here are some possible Clauses that you can put into your Option Contracts. There is really no

perfect clause. Just make sure that you cover every possible problem or issue in your clause so

that you significantly reduce unwanted consequences. You will add many more clauses of your

own as you write deals.

1. Optionee reserves the Right to Renew the Option for ______ term(s) of ________ (day, week,

month, year) periods. This right is given by the Optionor and can be renewed without the written

consent of the Optionor to the Optionee.

This clause gives you the freedom to renew the Option without the need to get permission of the

Optionor. Not all might we willing to provide this but definitely ask

2. Optionee has the right to assign this contract to any person, persons, and/or entity during the

Option period. Upon Assignment, the Optionee is fully removed from all the rights and

obligations of the Option Contract. The Optionee warrants that the Conditions of the Contract

have been fulfilled and that the Optionee has the full authority as indicated in the Contract. The

Assignee (the new Optionee) acknowledges that the rights and responsibilities of this contract are

now the Assignee’s and the Assignor (the former Optionee) is released of all liability and

responsibility for the Option Contract being assigned.

This clause just ensures that upon assignment of the contract that all rights and obligations are

passed on to the buyer of the contract. It makes clear that the new Optionee is now in control of

the contract and takes with that control the responsibilities that come with it.

3. The Optionor retains the right to sell the aforementioned property to another buyer during the

time of the Option to Purchase Agreement, and is not obligated to deal exclusively with the

Optionee. If, however, the Optionee, indicates that he/she will exercise their option, according to

the terms of the agreement, the Optionor is obligated to sell the property to the Optionee for the

terms indicated in this agreement, without any hindrance or encumbrance.


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This is known as a “non-exclusivity” clause. It makes very cautious Sellers feel more

comfortable providing an Option, and eliminates the fear of being trapped by a contract. Only use

this clause if: a) the deal is a very good one and you see good profit for yourself AND b) the seller

absolutely needs some reassurance that their interests are protected.

4. The Optionee has the right to perform any and all improvements to the property including but

not limited to: re-zoning, surveying, severing, selling, construction activities, unrestricted access

to land and other activities intended to make the property marketable. The Optionor releases the

right to obstruct these activities during the option period.

This clause is pretty bold, and may not fly in its’ entirety by every seller. Other sellers, in their

desperation to sell their property will agree to these and other terms. Put into this clause what you

need to feel comfortable working with the property to accomplish what you need to do sell, lease,

or market the property. You’ll be surprised what you can get when you ask. To strengthen this

clause, you may need Power Of Attorney to deal with the required institutions to work on behalf

of the seller. Email me if you need a Power of Attorney Form at [email protected]. For

example, if you have to get banking information, tax information, evict troublesome tenants and

virtually any other function typically performed by the seller, get a Power of Attorney signed by

the seller, and limit the term of Power of Attorney to the term of your Option to Purchase

Agreement.

5. The Optionee reserves the right to be released of the Option to Purchase rights and obligations

at any time and at his/her own discretion. This release need not be indicated in writing. This

release must be made clear to the Optionor in either written or verbal form.

The purpose of this clause is to just make it simple for you to get out of an Option to Purchase

that you no longer want to have. By removing the necessity of “writing” your intentions, you

could revoke the Option to Purchase with a phone call. On the flip side, make sure that those who

would get out of your contracts be required to do so in writing. This may sound like a double

standard, but always write your contracts in your own favour to reduce and limit your liability in

deals. Don’t make someone else’s problem your problem. The whole idea, is to take advantage

of the freedom that the Option to Purchase Contract provides, by the way it gives you the rights

without a lot of the responsibilities of Ownership.

Remember that there is no magic clause in a contract. You can write anything into the contract

you want, provided: a) you don’t violate any laws of the land (county, municipal, city, provincial,

state, federal or otherwise) AND b) that they are agreed upon, in writing, with the person making

the contract with you. Always, have a lawyer view your contracts before signing your final

signature to a deal. There is so much that can happen or not happen by a well written or poorly

written contract. Protect yourself and the risk is minimized.


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OPTION TO PURCHASE

May it be known by this document:

That__________________________________(hereinafter referred to as “Seller”) hereby agrees for and in

consideration of ________________________Dollars($____________). Paid by _________________________

(hereinafter referred to as “Buyer”)

AS FOLLOWS:

1. PROPERTY: seller HEREBY GIVES AND GRANTS TO buyer and to his heirs and assigns for a period of:

_______________________ from date hereon (hereinafter referred to as “First Option Period”) the

exclusive right and privilege of purchasing the following described real property located at:

________________________________________________County of ___________________,

State/Province of ______________________, and more particularly described as follows:

Together with all rights appurtenant thereto or used in connection therewith. (Said real property and

improvements, if any, shall hereinafter be referred to as “The Property”).

2. PRICE: The total purchase price for said property is:__________________________________

($________________) Dollars, payable in lawful money of ___________________(currency), strictly

within the following times, to-wit. All sums paid of this option and any extension thereof as herein

provided, shall be first applied on the purchase price, and the balance shall be paid as follows:

3. EXTENSION OF OPTION. Upon payment by Buyer to Seller of an additional sum of:

________________________________ ($______________) Dollars, cash or by cashier’s cheque, prior to

the expiration of the first option period, this option shall be extended for:

_____________________________________________ (hereinafter referred to as “Second Option

Period”). Upon Buyer’s payment to Seller of a further sum of: _______________________________

($________________) Dollars, prior to the expiration of the second option period, this option shall be

extended for a third period of: ________________________________________________ (hereinafter

referred to as “Third Option Period”).

4. EXERCISE OF OPTION. This option shall be exercised by written notice to Seller on or before the

expiration of the first option period, or if extended, the expiration of the second or third option periods as

the case may be. Notice to exercise this option or to extend the option for a second or third option

period, whether personally delivered or mailed to Seller at his address as indicated after Seller’s signature

hereto, by registered or certified mail, postage prepaid, and postmarked on or before such date of

expiration, shall be timely and shall be deemed actual notice to Seller.

5. EVIDENCE OF TITLE. (a) Promptly after the execution of this option , Seller shall deliver to Buyer for

examination such abstracts of title, title policies, and other evidences of title as the Seller may have. In

the event this option is not exercised by Buyer, all such evidences of title shall be immediately returned

without expense to Seller. (b) In the event this option is exercised as herein provided, Seller agrees to

pay all abstracting expense or at Seller’s option to furnish a policy of title insurance in the name of the

Buyer. (c) If an examination of the title should reveal defects in the title, Buyer shall notify Seller in

writing thereof, and Seller agrees to forthwith take all reasonable action to clear title. If the Seller does

not clear title within a reasonable time, Buyer may do so at Seller’s expense. Seller agrees to make final

conveyance by Warranty Deed or ________________________ in the event of sale of other than real

property. If either party fails to perform the provisions of this agreement, the party at fault agrees to pay

all costs of enforcing this agreement, or any right arising out of the breach thereof, including a reasonable

Attorney’s fee.

6. CLOSING ADJUSTMENTS. All risk of loss and destruction of property and expenses of insurance shall be

borne by Seller until date of possession. At time of closing of sale, property taxes, including documentary

taxes, rent, insurance, interest and other expenses of property shall be prorated as of date of possession.

All other taxes including documentary taxes, and all assessments, mortgage liens and other liens,

encumbrances or charges against the property of any nature shall be apid by Seller except:

7. POSSESSION. Seller agrees to surrender possession of property on or before ______________ days

following written notice of the exercising of this option by Buyer.

8. If this option be not exercised on or before the dates specified herein for exercise of same, the option

shall expire of its own force and effect and the Seller may retain such option monies as have been paid to

the Seller as full consideration for the granting of this option.

IN WITNESS WHEREOF, the Seller has set his hand and seal this ________ day of _____________,20___

SIGNED IN PRESENCE OF:

_______________________________________ _______________________________________

_______________________________________ _______________________________________

Assignment of Option to Purchase Agreement

THIS ASSIGNMENT, dated ___________________________, ___________, is between ___________________________________________, the Assignor(s) and _________________________ ________________________________________, the Assignee(s).

The Assignment fee is $_________________________, payable in U.S. funds at____________________________(time of assignment, at close, other).

For value received, Assignor assigns and transfers to Assignee that Option to Purchase Agreement dated ___________________________, ___________ executed by Assignor as ____________________________________, of the following described premises: __________________________________________________, together with all his right, title, and interest in and to the Option to Purchase Agreement, subject to all the conditions and terms contained in the Option to Purchase Agreement, to have and to hold from ___________________________, ___________, until the present term of the Option to Purchase Agreement expires.

A copy of the Option to Purchase Agreement is attached hereto and made a part hereof by reference. Assignor covenants that he/she is the lawful and sole owner of the interest assigned hereunder; that this interest is free from all encumbrances; and that he has performed all duties and obligations and made all payments required under the terms and conditions of the Option to Purchase Agreement.

Assignee agrees to pay all monies due after the effective date of this assignment, and to assume and perform all duties and obligations required by the terms of the Option to Purchase Agreement.

Signed:

_______________________________ ________________________________Assignor Date Assignee Date

_______________________________ ________________________________Assignor Date Assignee Date

Copyright © 2003 4017501 Canada Inc. All Rights Reserved.

Real estate transactions are governed primarily by provincial or state law. The laws of your Province or state may require additional provisions or may prohibit the use of some provisions. Thus, have your lawyer review this and all forms before you use them.

Troy Treleaven - Straight Options

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