What Forms Do I Need to Sell a Half Interest in My Property?

Full question:

I own a piece of property. I still owe a sum to the bank which is paid monthly. My son in law wants to take over the payments for 1/2 ownership in the property. What type of contract should we sign to make this a legal contract? Also what happens if the property is sold before he has made his obligation to pay for his obligation?

• Category: Real Property
• Subcategory: Sales
• Date: 04/07/2025
• State: Florida

Answer:

The answer will depend in part on whether you plan to add him to the deed now or after payments are complete. How payments are treated on sale of the property will be a matter of contract negotiation between you and your son. If the contract terms state that he will gain ownership though making payments, a sale may be a breach of contract, so the contract should include the terms dealing with your right to sell the property and how his payments are treated in such event. Since there is already a mortgage on the property, a transfer may accelerate a due-on-sale clause, requiring the balance of the mortgage loan to be paid in full.

A contract for deed, or land contract, is often used as an alternative means of financing the purchase price of property. 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.

A promissory note may provide for payments to be made in installments or in a lump sum. The terms may provide for a series of smaller payments at the beginning of the loan period and a larger balloon payment at the end of the loan period. The option for a confessed judgment agreement, also called a cognovit note, may also be included. A confessed judgment agreement requires the debtor not to claim defenses and agree to have a judgment entered against him if he fails to pay and the matter is taken to court.

Please see the following information regarding promissory notes:

Promissory Note: A promissory note is a written promise to pay a debt and is typically signed at the time of the loan. It is an unconditional promise to pay on demand or at a fixed or determined future time a particular sum of money to or to the order of a specified person or to the bearer.

Cognovit Note: A cognovit note is a note in which the maker acknowledges the debt and authorizes the entry of judgment against him or her without notice or a hearing : a note containing a confession of judgment. This type of note is not valid in many States.

Collateral Note: A collateral note is a note secured by collateral. Same as a secured note.

Demand Note: A demand note is a note payable on demand from the person who is owed the money.

Floating Note: A floating rate note (or adjustable rate note) is a note where interest varies.
Recourse Note: A recourse note is a note where the default may result in loss of collateral and also personal suit and judgment. Most notes are recourse notes.

Renewal Note: A renewal note is a note that renews a previous note due date.

Unsecured Note: An unsecured note is a note that is not secured by any collateral but only the promise to pay (i.e. signature only is required to loan the money).