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Old 10-18-2019, 05:55 AM
pengyou pengyou is offline
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I am looking at buying some land where the owner provides financing. This will be a big help to me but I am not sure how to do it so that I (and the money I am paying for the property) am protected. Does anyone have any experience with this? Any suggestions?
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Old 10-18-2019, 07:19 AM
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Depending on State law you will want a proper document such as Contract for Deed to be made. You also might want a Escrow company or Bank to handle payments you make (might be a cost to you). Title search should be done before you sign a contract if you are uncertain that the land owner has any issues with the Deed. You might also want Title Insurance.

There are attorneys that specialize in land contracts that could represent your interests but you will pay for this.

Typically Owner Financing is done when normal avenues of financing are unavailable to the purchaser. Either from being rural property or the purchaser lacking a good enough credit history. It has risks that you should research.
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Old 10-18-2019, 07:57 AM
gungatim gungatim is offline
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around here it's called a land contract. I have purchased land that way, and sold a rental house that way. basically the owner sells the property, the buyer pays you monthly payment + interest, which is typically much higher than a normal mortgage (was around 11% when I did it, when mortgages were around 5%).

typically written in such a way that if they miss a single payment, the owner gets the property back, and keeps all the money (ie. no equity for the buyer).

I know people who have sold houses on LC multiple times, make money off people who can't get a loan, and typically default. can be more profitable than renting even...

my land was vacant and didn't qualify for a mortgage while I was building the house, so I did the LC and just paid it off when the house was done with a conventional mortgage.
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Old 10-18-2019, 08:18 AM
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Land contract would be favorable, but GET an attorney to help craft it. Make sure it can't be taken back without cause, and be sure you know the risks which would trigger a cause.
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Old 10-18-2019, 08:29 AM
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What everyone else has said. Get a title company/attorney to handle the paperwork. Make sure the paperwork is recorded with the county. That your name is put on the taxes. That there isn't any slippery language about the seller gets property back if you default. That the seller has to use the same foreclosure process as banks to recover their assets

-K
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Old 10-18-2019, 09:02 AM
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... That there isn't any slippery language about the seller gets property back if you default. That the seller has to use the same foreclosure process as banks to recover their assets

-K
It is not slippery language. It is a necessity that many land owners demand to take the risk of Owner finance. States have specific laws governing default and remedy. Not to mention that the Contract you sign should spell out the details.

A land owner does not have the resources of a Bank to absorb a loss. They also have less requirements that Federal and State law put upon mortgage companies.

Would you sell you property with no way to recover it if not paid for?
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Old 10-19-2019, 02:24 AM
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We're buying our acreage on an "Owner Carry." We make our payments to a title company, which then pays the seller after deducting their fee. Quite a few properties in our area are sold that way, particularly those that have manufactured homes on them.
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Old 10-19-2019, 01:28 PM
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I'm in agreement with MattB4.
I just bought a "rent to own" on a 6 year plan (my choice) and all that was required was the notarized contract, which is typical here in Oklahoma, but the laws might differ where you are. Better to be safe than sorry .
Main thing is, get the contract NOTARIZED.
My brother once bought 15 acres, it was a great/fabulous deal, but he didn't have a clue about getting contracts notarized, until I pointed this out. It saved his bacon when the prior owner committed suicide and the remaining family tried to confiscate it (make him move). Long story short, the law was on his side and he continued to make payments to the family.
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Old 10-19-2019, 02:47 PM
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I'm going to break with the popular opinion here and advise that you have your attorney handle it just like any other real estate closing:

- The mortgagor grants the mortgagee a mortgage deed, dictated by a note, one or both of which are recorded in the land records. The only difference is that the seller and the mortgagee are the same party.

- Your attorney will endorse a title insurance policy, which is a policy that insures the accuracy of the title search.

- Equitable title vests in fee simple with the Warranty Deed at the closing. No delay of vestiture. You get title, subject to the lien(s) at the closing. This puts you on a firmer footing should anything go horribly awry, and doesnt rely upon the future performance of the seller or his heirs to transfer title.
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Old 10-19-2019, 02:55 PM
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Be wary of how the seller calculates interest if he does the financing.
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Old 10-19-2019, 02:59 PM
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Quote:
Originally Posted by Harmless Drudge View Post
I'm going to break with the popular opinion here and advise that you have your attorney handle it just like any other real estate closing:

- The mortgagor grants the mortgagee a mortgage deed, dictated by a note, one or both of which are recorded in the land records. The only difference is that the seller and the mortgagee are the same party.

...
It is not like a typical mortgage and to handle it in that manner will likely cause the land owner to say, "Sorry not interested". By and large the only time the State gets involved is as contract fulfillment (paid off) when Deed is conveyed. At that time Real estate sales tax, any back property tax and recording fees get paid.

I am not opposed to a attorney to review the land contract but you have to understand that the land owner is not so desperate that they will sign away their rights to a buyer.

If you are rich enough to demand all the protections you are rich enough to finance your own purchases.
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Old 10-19-2019, 03:19 PM
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I have looked at a few properties where banks would refuse to do a mortgage. Often these were old farm houses that pre-date code. So if the house is NOT up to code, you can not get a bank loan on it.

Use a lawyer and a title company.
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Old 11-11-2019, 09:26 PM
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Quote:
Originally Posted by pengyou View Post
I am looking at buying some land where the owner provides financing. This will be a big help to me but I am not sure how to do it so that I (and the money I am paying for the property) am protected. Does anyone have any experience with this? Any suggestions?
Ni shi wode pengyou? Ni shuo xongwren?
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Old 11-11-2019, 10:40 PM
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Quote:
Originally Posted by eyepal View Post
I'm in agreement with MattB4.
I just bought a "rent to own" on a 6 year plan (my choice) and all that was required was the notarized contract, which is typical here in Oklahoma, but the laws might differ where you are. Better to be safe than sorry .
Main thing is, get the contract NOTARIZED.
My brother once bought 15 acres, it was a great/fabulous deal, but he didn't have a clue about getting contracts notarized, until I pointed this out. It saved his bacon when the prior owner committed suicide and the remaining family tried to confiscate it (make him move). Long story short, the law was on his side and he continued to make payments to the family.
Not only notarized, but RECORDED with the county!!!!
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Old 11-12-2019, 07:10 AM
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Quote:
Originally Posted by alv7722 View Post
Not only notarized, but RECORDED with the county!!!!
The property owner will often not have it recorded until Deed transfer. No real need to do so unless taxes are going to be sent to the person buying the property. Which brings up one situation with Property contracts to keep in mind. Are the property taxes being paid? Both the Seller and the buyer needs to keep aware of this to prevent property sold at Tax auction.

Properly witnessed and signed Contracts are binding instruments. The idea of the Notary is simply to ensure a person with State sanction has checked that the signatures are valid. Courts have ruled over and over that even verbal contracts between two parties can be binding in law.
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Old 11-14-2019, 05:35 AM
pengyou pengyou is offline
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Quote:
Originally Posted by Omgitsjoetime View Post
Ni shi wode pengyou? Ni shuo xongwren?
Keneng, shi nide pengyou, danshi, zhongwen meiyou xongwren :
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Old 11-15-2019, 04:34 PM
RobertSWMissouri RobertSWMissouri is offline
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I have both bough and sold under "contract for deed"
1. Contract MUST be recorded
2. Ensure there is a buy out provision (after some percentage of the principal has been paid), even if you never need, critical for a iron-clad contract
3. CRITICAL is for a title company / bank etc. to hold the a quit claim deed from the seller to you (for when you have made all payments) and a quit claim deed from you back to the seller (for their protecting if you default) AND a instructing document telling the agency when to do what.
4. By far the best, is that the above agency receives your payments, and passes on to the seller; far better record than just cancelled checks.
5. Be sure contract addresses tax's and insurance.

Good luck, Robert
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Old 11-15-2019, 05:33 PM
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I wouldn’t want a “ no equity “ contract. But other than that owner finance is fairly common for even people with decent credit buying land with no improvements.

Banks don’t want to lend on unimproved land because it’s hard to liquidate if they get stuck with it. At the same time owners have little risk selling unimproved land , since the buyer has no maintenance they can neglect and lower the value. Plus many buyers would rather have land sitting earning interest than costing them taxes.

I’d be careful and would have to have a title company involved. Especially if mineral rights etc where involved.

You want to make sure the guy you are paying owns the land he’s selling.
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