Full question:
I am selling a motel with an apartment for $225,000. The buyer is paying 0 down, but will pay 2,000/month, make renovations, pay all taxes and utilities; then in 2 years will pay $250,000 CASH from her trust fund payment. I have letter from loan officer. Do I need a Contract for the Sale of Commercial Property; or a Contract for Deed. Property also has residence (an apartment and a trailer); and it is a commercial building on 1.81 acres.
- Category: Real Property
- Subcategory: Sales
- Date:
- State: Tennessee
Answer:
The answer will depend on all the circumstances involved, such as whether you wish to transfer the deed now or later. A contract for deed, or land contract, is often used as an alternative means of financing the purchase price of property and whether the mortgage may be assumed by the buyer. The buyer does not receive an actual deed until payments are made under the terms of the contract for deed agreement. Until the buyer receives a deed, ownership isn't transferred and the property is subject to being foreclosed on if the mortgagee/owner defaults on the mortgage. The responsibility for payment for the property is a separate issue from the ownership of the property.
If there is a mortgage on the property, the contract may violate a due-on-sale clause in the mortgage which the lender may or may not seek to enforce. Most lenders require that the mortgage or deed of trust contain a due on sale clause. This is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent.
Please see the information at the following links for further discussion:
http://ezinearticles.com/?The-Advantages-of-Buying-With-Owner-Financing&id=1595064
http://www.curtepperson.com/seller.htm
http://www.ehow.com/how_8133_offer-seller-financing.html
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
