What Does The Term ...
"tie it up under option" refer to. I am just trying to find my way out of the gate and still learning the terminology. I know what the term means I guess, but how it it done. If I find a great deal I want to hold for an investor I mean?
The term "tie it up with an option" could refer to 2 different scenarios:
. This is where the property owner grants someone the right to lease the property and an option to purchase it for X$ by Y date. The owner would charge a fee for this option because until the tenant/optionee exercises the option (decides to buy the property) or the option period expires, the owner cannot sell the property to someone else.
1. lease with option to purchase (sometimes just called "lease option" or "L/O"
2. option to purchase. Buyer/optionee gives owner a fee in exchange for the right to buy the property for X$ by Y date. Again, owner can't sell the property to someone else until option period expires. Only difference between this and #1 is that buyer/optionee has no right to lease the property.
In either scenario, if the optionee doesn't buy the property within the required time, the optionee forfeits the option fee.
Option is used, you are correct, as a means to put the property on ice while you either find an investor to assign to or you perform some necessary due diligence on the property, but usually it's the former situation. In either scenario, tenant/optionee or buyer/optionee should negotiate to have the right to assign.