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Does the Seller PROFIT on Termination Option Money??

By
Real Estate Agent with RE/MAX DFW Associates 0534986

I am the listing agent on two short sale properties and this question has come up on both properties when I received offers.  Does the seller profit concerning the termination option period?  This is the option that gives the buyer the unrestricted right to terminate the contract for any reason within an agreed amount of days. The buyer gives a check for an agreed upon amount.

One of the buyers agent has told me they did not know who to make the check out to for the termination option period. I said the seller of course! She said "The sellers are not supposed to profit from a short sale"

money clipart

I asked the other buyers agent to bring me the earnest money and the option check. He boldly stated "In NO WAY can the seller profit from a short sale, I will not be turning in an option check!"

This prompted me to call the TAR legal hotline.  An attorney called me back and said if the buyers agent does not turn in an agreed upon option check, then the buyer does not have an option period. We have a valid contract just no option period.

I asked both agents to give the seller the termination option checks and if you don't ,then the buyer can opt out , but the seller will keep the earnest money.

Posted by

Tracy Lee Parker

Broker Associate with
RE/MAX DFW ASSOCIATES

Servicing all of North & East Texas Areas for home selling, home buying, leasing & property management since 2005!  

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Comments (2)

Bill Morris
RE/MAX Capital City - Austin, TX
ABR, CRS, CDPE, ePRO, MBA

Even if the seller ends up keeping the option fee, it can hardly be considered "profit."  I tell my buyer-clients that this amounts to "paying the seller to take the property off the market while you decide whether you want it."  This is a completely unrestricted right to terminate -- for any reason, or for no reason at all!  Obviously, losing market time is not free, and the $100 or so that is common for the option is not much in that context.

In the case of a short sale, it is important to point out that the option period doesn't begin until lender approval allows the sale to move forward.  The short sale addendum defines how the Effective Date is reset and what that means for all contractual deadlines.  Agents raising this concern need to spend a few minutes reading our contracts, and attend the state-required Legal Update MCE!

Feb 02, 2010 03:20 AM
Tracy Lee Parker
RE/MAX DFW Associates - Royse City, TX
Buy*Sell*Rent

Bill-Amen! I agree on your last statement!  The remarks were from "what they heard",  because they both started off with "I heard" the seller could not profit. 

 

Feb 02, 2010 04:18 AM