What’s an Option Contract?

The Unison HomeOwner Agreement is an Option Contract. Since you do not make any monthly payments to us, we use this contract, an admittedly complex concept, to allow us to provide a payment to you without you paying taxes on the money received. An Option Contract is a way of structuring a deal where one party makes an agreement that gives another party (Unison, in this case) the option to buy an agreed upon percentage of a home in the future. This is what allows us to share only in your home’s change in value when you sell.

We want to take moment here to recognize that the math we’ve presented in the Sample Scenarios section is slightly different than the Option Contract mechanics-but we want to emphasize that the amount you receive and the amount Unison receives is the same in those examples as it is under the Option Contract mechanics.


At the beginning, Unison purchases an option to buy 40% of your home, which is worth $500,000 in two payments – one now, at $50,000, and one at future exercise, at $150,000.In the future, you sell your home for $600,000.

A title company will typically handle the finances for you, and will process a bunch of transactions simultaneously. In one of those transactions, Unison will exercise its option to pu¬¬¬rchase 40% of your home by paying the title company the second installment payment of $150,000. In another transaction, they will pay us our “share” in the sale of the home (40% of $600,000, equaling $240,000). But, since the transactions are simultaneous, they simply deduct one from the other: $240,000 – $150,000 = where we arrive at one payment to Unison of $90,000.

* Note: The net return to Unison at the end of our agreement together is the same as the simplified, non-option math that shows accessing 10% of a home that appreciates from $500,000 to $600,000 will result in a net payment to Unison of $90,000 at sale.

So, the option math is more complicated, but the title company will manage that part. If you focus on the simple math from before, it will do the same job of keeping you on the right page.


Remember: You decide when the option contract ends. Unison cannot exercise our option until you make the decision to buy us out early, sell your home, reach the 30 year max term, or if you materially default on your mortgage. Read more about the different ways that our agreement ends later in the section Ending Your Unison HomeOwner Agreement.

You Keep the Equity You Build

Now, we’re going to use the same scenario and
apply the terms used in the Option Contract.


You receive $50,000 Initial Payment from Unison. In return, Unison has the future option to purchase a 40% interest-the Investor Percentage-for a $150,000 Balance Payment.

Sale of Your Home

Unison pays the $150,000 Balance Payment for its 40% interest-now worth $240,000. The net return to Unison at sale is $90,000.

*Note, the net return to Unison at the end of our agreement using the two different calculations is the same — $90,000.

Option exercise and Orderly Sale

Unison can choose to offer the homeowner a remedy of Option Exercise And Orderly Sale in lieu of the foreclosure proceeding, by offering to cure the circumstance of default. The homeowner will have the right to accept or reject this offer. Should the homeowner accept the offer, Unison will make one or more Protective Advances to cure the homeowner’s default, and the homeowner will give Unison the right to market and sell the property in an orderly sale in the customary manner in its local market. Option Exercise And Orderly Sale is designed to prevent the home from becoming a “distressed” property and going to foreclosure, which preserves the market value of the property, and the value of both the homeowner’s and Unison’s equity interest in the property. Following the Option Exercise And Orderly Sale, the homeowner and Unison will share the proceeds according to the provisions of the Unison HomeOwner Agreement.

Deferred maintenance adjustments

We trust you’ll take care of your home – but in the off chance you don’t?

Prior to signing an Agreement with Unison, we typically require a home inspection. While many inspections don’t reveal anything new (maybe a lost sock?), they sometimes uncover defects or conditions that can affect the property value if not addressed. For example, an inspection might reveal significant rot in the framing under the home’s main living area. Issue like this may worsen over time, thus negatively impacting the property’s future value and desirability.

If a significant issue(s) is found during the inspection, Unison may make note of it in a Deferred Maintenance Addendum. Ideally, the homeowner will arrange for the necessary repairs to be made. However, if the homeowner doesn’t, Unison reserves the right to treat the issue as a Deferred Maintenance Adjustment scenario in the future. Note: You will always be notified if this Addendum is part of your original Agreement.

We want you to make the best decision for you and your family. And while we do our best to explain everything, we highly recommend you carefully review the Unison HomeOwner Agreement, the Unison Legal Documents, and other materials available online. It’s a good idea to do this with family members, as well as with your legal and financial advisors. In fact, we advise you to do so. Your program specialist will be happy to provide you with all the documents necessary.

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