Why You Should Record a Memorandum of Real Estate Option Agreement

Finally, I highly recommend that you include a clause in your real estate option agreement that allows you to record a memorandum of real estate option

FORM 17.1 Sample Joint Escrow Instructions

On this ninth day of July 2005, Robert D. Jones as Optionor/Seller and Donald S. Reed as

Optionee/Buyer agree to have Mr. John B. Good, attorney at law, whose law office is located at

6907 Charleston Court, Tampa, Florida 33607, hold the following documents in escrow for the period from July 9, 2005 to 12:01 a.m. on July 8, 2006:

1. One copy of the Real Estate Option Agreement dated July 9, 2005, with the witnessed and notarized signatures of the Optionor and Optionee.

2. One copy of the addendum Real Estate Purchase Agreement, with the witnessed and notarized signature of the Optionor as Seller only.

3. One copy of the Warranty Deed with the witnessed and notarized signature of the Optionor as grantor.

4. Two copies of the HUD 1 Settlement Statement, which lists the Buyer's and Seller's closing costs.

The documents listed above are to be held in escrow by Mr. Good, in accordance with the following joint escrow instructions:

1. All notices to Mr. Jones, Mr. Reed, and Mr. Good must be sent by United States Postal Service Certified Mail, return receipt requested.

2. In the event that the Real Estate Option Agreement is assigned to a third party, Mr. Reed must send Mr. Jones and Mr. Good one copy each of the Real Estate Option Assignment Agreement along with the full legal name and post office address of the assignee.

3. In the event that the real estate option period is extended, Mr. Reed or his assigns must send Mr. Good a copy of the option extension notice with witnessed and notarized signatures of Mr. Jones and Mr. Reed or his assigns.

4. In the event that the real estate option is exercised, Mr. Reed or his assigns must send

Mr. Jones an exercise of real estate option notice. A copy of the notice also must be sent to Mr. Good.

5. Mr. Reed or his assigns must execute the Real Estate Purchase Agreement held in escrow by Mr. Good, by having his signature as Buyer witnessed and notarized.

6. Mr. Reed or his assigns must provide Mr. Good with a cashier's check in United States currency that is drawn on a local bank and made payable to Mr. Jones, in the amount stipulated in the Real Estate Purchase Agreement, less the Seller's closing costs and any additional adjustments or prorations.

7. Mr. Reed or his assigns shall receive the Warranty Deed held in escrow by Mr. Good.

8. Mr. Good must send Mr. Jones his cashier's check and copies of the HUD 1 Settlement Statement and Warranty Deed within twenty-four hours of the transaction closing.

(continued)

FORM 17.1 Sample Joint Escrow Instructions (Continued)

9. In the event the option period expires without the option being exercised, Mr. Good must send Mr. Jones the Real Estate Purchase Agreement and Warranty Deed within twenty-four hours of the expiration date.

IN WITNESS WHEREOF, Optionor/Seller and Optionee/Buyer have set their hands the date aforesaid.

David D. Jones Donald S. Reed

Optionor Optionee

Robert B. Big Sally M. Little

Witness Witness

Copyright Thomas J. Lucier 2005. To customize this document, download it to your hard drive from Thomas J. Lucier's web site at www.thomaslucier.com/optionforms.html. The document can then be opened, edited, and printed using Microsoft Word or another popular word processing application.

agreement, such as the sample on page 183, in the public record of the county where the deed to the property under option is recorded. I advise recording a memorandum instead of the actual real estate option agreement because the terms of the agreement should be kept confidential. There is no reason to tell your competitors what you are up to. When I was young and dumb, I learned the hard way about not recording a memorandum of option in the public records. A property that I owned an option on was condemned by an eminent domain action by the Florida Department of Transportation as part of a road-widening project. But because I had failed to record a memorandum of option in the public records of the county where the property was located, the State of Florida had no way of knowing that I owned an option on the property, and I was never notified. However, if I had recorded a memorandum of option, I would have been notified by the state of Florida and could have exercised my option, bought the property, and walked away with a nice payday! Instead, I ended up learning about the eminent domain proceeding after my option had expired.

FORM 17.2 Sample Memorandum of Real Estate Option Agreement

This Memorandum of Real Estate Option Agreement made this ninth day of July 2005 is for the purpose of recording and giving notice of a Real Estate Option Agreement between Donald S. Reed, a single man, as the Optionee, in which the Optionor, David Jones, a single man, grants to Optionee the exclusive, unrestricted, and irrevocable right and option to purchase that certain real property known as: 45735 Hillsborough Avenue, Tampa, Florida 33603, and legally described as: Lots 47, 48, and 49 of Carters subdivision, according to map or plat thereof, as recorded in plat book 69, page 89, of the public records of Hillsborough County, Florida, that was executed between the Optionor and Optionee on the ninth day of July 2005 and which will expire at 12:01 a.m. on July 8, 2006.

IN WITNESS WHEREOF, Optionor and Optionee have set their hands the date aforesaid.

David D. Jones Donald S. Reed

Optionor Optionee

Robert B. Big Sally M. Little

Witness Witness

Copyright Thomas J. Lucier 2005. To customize this document, download it to your hard drive from Thomas J. Lucier's web site at www.thomaslucier.com/optionforms.html. The document can then be opened, edited, and printed using Microsoft Word or another popular word processing application.

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