It’s the last day of my buyer’s option period. The buyer and seller are still negotiating repairs and want to extend the option period. How do we do that?
Use TREC’s Amendment to the contract (TXR 1903, TREC 39-8) and fill in an amount acceptable to both parties in Paragraph 6. To ensure the extension of the option period is valid, be sure to include an amount the buyer has paid seller for the additional option fee. Leaving it blank or putting zero dollars may lead to an unenforceable amendment.
It’s also important to know that signing the amendment acknowledges the receipt of the payment of the additional option fee. No further receipt is needed.
What is the buyer never makes the payment?
So is there a minimum dollar amount? $0.01 $1.00 or $10.00? I have heard in past that $10.00 is a minimum, can anyone tell me the correct answer?
one dollar is sufficient. As long as both parties agree to it. Just has to be SOME amount of “consideration” paid in order to be a contract.
Is it really necessary for the buyer to pay an additional option fee to extend the option period? (Oct. 29, 2012). Legal FAQs for REALTORS® — Contracts and Forms
Yes. The amount of the option fee is negotiable, but it would be wise to pick a number that does not appear to be simply a symbolic gesture. For instance, a court may find that payment of $1 does not satisfy legal requirements. An extension of the termination-option period must have an additional option fee paid to the seller to ensure that the extension is legally enforceable.
So technically, though effectively, we don’t extend an option period, we create a new one. This is how this instructor teaches this.😃
Technically and legally the amendment as it reads is extending the option period that was created by the contract. Both parties have to agree and sign to extend the option period via the amendment to the contract before 5:00 p.m. on the last day of the option period to be a legally binding extension of the option period. Now if the contract when executed did not have an option period and later both parties agreed to do an option period (usual but could be done), that would be creating an option period. In this unusual situation, I would put that… Read more »
Yep, so they are creatIng a new option period. My law school experience has me seeing it that way Earlene.
It is also important to note that the Amendment needs to be fully negotiated prior to 5 pm on the final date of option in order for the Buyer to be protected. If 5pm comes and goes with no extension to the option the Buyer no longer has an opt out under this paragraph.
What a complete waste of time. Buyers have to write a $1.00 check, agents have to run around and deliver it. Maybe we should use some common sense regarding “consideration”.
yes, I agree, I wonder if the seller has agreed no additional option money in writing, is good enough to put $0 in amendment?
Attorneys have weighed in on this and say something has to be paid, since this provision in the contract is for the sole benefit of the buyer; something of value has to be paid.
Agree 100%.
more and more use venmo these days!
Is it really necessary for the buyer to pay an additional option fee to extend the option period? (Oct. 29, 2012). Legal FAQs for REALTORS® — Contracts and Forms
Yes. The amount of the option fee is negotiable, but it would be wise to pick a number that does not appear to be simply a symbolic gesture. For instance, a court may find that payment of $1 does not satisfy legal requirements. An extension of the termination-option period must have an additional option fee paid to the seller to ensure that the extension is legally enforceable.
With the advent of Zelle, Apple Pay and Venmo, no one needs to run around anywhere. There’s talk about the Title Companies accepting option money at some point. Let’s not over think this.
You can send it through electronic payment such as zelle, venmo, cash app, or PayPal. That’s what we’ve been doing for option money and the lenders we’ve worked work were ok with it.
And technically, no Seller ever “wants to extend an option period”. They may consent to it, to hold a deal together.
I will also deliver a termination of contract notice if the seller is unwilling to extend the option period.
Get real people, sellers should refer to the “True Cost of Carry” principal,interest,taxes and insurance on the subject property , should be figured on a per diem basis at a minimum to come up with a real option fee. Anything less is a insult to the term Realtor and or Real Estate. Quit diapering these people that want to tie up properties at less than what it cost to carry with no recourse. Completely disrespectful to your sellers!
I don’t believe that an extension of the option is necessarily an extension of the closing date. If not what are the extra costs that the Seller incurs unless one assumes the option will be excised and if that’s the case don’t grant the extension.
Totally agree !
Not disrespectful. When a seller hasn’t lived in the property and doesn’t provide a disclosure, the prospective buyer must get an inspection and find companies that can come and give estimates on repairs. Sometimes, that just doesn’t happen in the option period. It’s especially difficult if you are trying to buy in a state other than the one you live in. You have to research the taxes, insurance and other things. So an extension may be necessary for due diligence.
Am I the only one who thinks it’s ridiculous that the amendment says “buyer HAS PAID…”? That technically means you better hand-deliver the amendment and the check at the same time, before the seller signs it. Otherwise, the parties have executed a document saying the buyer has done something that hasn’t been done. This should have a 3-day delivery just like the original option payment. I’d like to know the legislative reasoning behind that wording.
That has always been an oddity that needs to be addressed. If the current delivery of a separate option fee goes away as expected in the future and they are deducted from earnest money (like in many commercial contracts) then this may no longer be an issue, but until then the language should be changed as it’s not feasible to deliver the option fee at the same time as signing the Amendment to extend.
As explained to me by several attorneys there are several legal consideration with this statement ‘BUYER HAS PAID”, the first being substance over form, and even thought the form states “has paid” payment would fall under reasonable requirement (what is reasonable? do you want a judge to make that determination). Finally the language of the form is not sufficient to bind the seller to the extended option . Bottom if the buyer does not pay the have no extension
I agree. Also considering the other comments. The way it is stated, The money must be presented at the time the option is signed. Also consider most extensions are only for a few days, 3. If the money is not paid the buyer can terminate without paying. However, if the option money is not paid, there is not option. Now, who has burden of proof, seller or buyer? If the buyer illegality terminates then we have a specific performance lawsuit. It seems to me the buyer would want to make sure funds for the option period can be validated.
NEVER deliver a Termination of Contract Notice to the Seller unless you really want to terminate the contract.
Once you do that the Seller can exercise that doc at anytime.
I or my Buyer, ALWAYS deliver $10 to the Seller or the Listing Agent’s Office the same day we deliver the Amendment.
A Buyer’s Agent is going to look pretty dumb if the Buyer loses their EM because the Agent thought the process was “ridiculous” or wanted to “prove a legal opinion” instead of exercising prudence and not following best practice in order to protect his Client’s best interest.
TREC requires a minimum amount of $10 fyi.
What if in the email request to extend the option period, the buyers agent says that if we don’t agree the buyer is terminating. They sent the message at 4:47 pm on the last day of the option. Does that message count as notice of termination? No termination notice was attached.
My question is a bit different. Both parties signed contract on Saturday, Feb.27, 21 (I represent the buyers) and I received the signed contract from the selling agent around 1:27pm. Does the option period begin the next day, Feb. 28,21?