option money note,
What is an option money note
Option Money is the fee that is paid by the buyer to the seller for the right to terminate the contract for a period of time which is also known as the option period. The fee depends on the terms of the contract and the home price. During this period of time, inspections of the property are done or even quotes are gathered by the sellers or buyers for repairs that the buyer might think needed. In quite simpler terms the buyer is actually paying the seller so that the property is taken off the market and meanwhile is checked more thoroughly and they can negotiate for any kind of unknown repairs or problems.
Technically speaking, real estate agents can still display the house or write a back up contract with a buyer. But even then the seller has to honor his primary contract. Only a buyer who has paid the option fee is allowed to do this.
Now, to maintain the above contract an Option Money Note is drawn up. It obviously has the signatures of both parties and the property address is also clearly mentioned. The Option Money Note shows the promise to pay the decided fee or money for the option to purchase the property. Any interest rate or amount is mentioned; this needs to be paid on any unpaid principal. Then the payments are mentioned which are usually on a monthly basis. This is done until the principal and interest is totally paid off. If there is any failure to pay the alternative is also clearly mentioned.
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