After Foreclosure, Is Option Owner Left Without Option?
Can we lose our right to exercise an option if the Owners who gave us this option default on loan?
My wife and I are purchasing a $6,500 option to buy 5 acres of land in Show Low, Arizona, for $1.00, anytime within the next ten years. Backward it seems, but here's the reason.
Our friends need money for a down payment on 20 acres of land. We're helping. They're also getting a ten-year bank loan in addition. Instead of a partnership, we're guaranteeing our position with an option.
We'll will pay 1/4 th of the 20 acre sales price ($5,000) half the closing costs ($1,000), and ten years of property taxes on five acres ($500) for a total of $6,500 for our Option.
To take possession, as well as avoid partnerships AND yearly tax issues, we have a purchase price of $1.00. Our friends, the actual owners will pay 100% of property taxes each year ($200) and not need to call us for this.
This seems to need a double closing so we don't lose $6,500 getting an option from the "expected" future owners.
1.) Am I correct about a double closing?
2.) Will our option always be secure, for example by exercising it with the bank if our friends default on their loan?
3.) Is there a better way?
Thanks! Alan
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