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#1) An experienced real estate attorney would also be able to set up amortized finance papers for land contracts.
#2) Obviously Yes. The buyer may escape higher requirements of other lenders and owner financing may help the seller to sell in a tough market.
#3) No, the buyer could always die or sell at anytime as well as pay off the debt. The best way to potentially achieve avoiding a payoff/refinance is to have great terms to begin with as well as the loan being made assumable (Prepayment penalties may or may not be allowed in land contracts, check the state laws regarding that).
#4) Recommend an experienced real estate attorney to draw up a real estate purchase agreement as well as other needed documents (addendums, disclosures etc.) that would be legally enforceable in your state.
Given your background, I'm surprised by your need to ask this.
Given that you are a broker/owner who clearly appears to be helping this owner by gathering information, why don't you just go a step further and provide the needed C.A.R. Zip Forms?
Your last question states that the owner doesn't want broker representation, why the FREAK are you helping this owner?
Would love to hear your response.
Candice A. Donofrio
Fort Mohave, AZ
Lake Bluff, IL
Stevens Point, WI
I don't give advice without representation aside from hiring a lawyer for these types of events
Panama City, FL
Pacific Palisades, CA
Pete X is well-versed and his answer should be read by all.....
I agree seller financing can be a great alternative to conventional loans for both buyer and seller. However, if seller has questions and does not want to involve a realtor than she really needs to speak with an attorney to make sure everything is set up as she desires. Also, she needs to make her estate plans.
Its this type of work that people charge money for and not offer for free
I just wrote a post on seller financing, which is common in AZ -- and is done in CA as well. Your state forms should already have seller carryback addendums. Your state also should have representation disclosures. The only question that really wasn't answered in my post is #3, in which I believe you're asking about prepayment penalties. I do not know if prepayment penalties are legal in CA. I do know that in AZ, our carryback addendum specifically says "payments or more". I don't believe you can prevent a buyer from refinancing a carried mortgage. I do believe that you can build in prepayment penalties that burn off as the loan is paid off. You need an attorney to answer these questions in more detail.
First off, doing what you are asking is being your own attorney which is never the smart thing to do. In IL, just get an attorney.
4 - Why worry what they do - send them to an attorney.
1 - As an agent in IL I can only fill out the approrpriate forms & then the attorneys take over. I CANNOT write in any legal wording or editing which is practicing law. Quick way to loose your license.
3 - Your question doesn't make sense.
This is not the place to give an answer as detailed as you ask for.
Far to complex of an issue.
To simplify though, most would be foolish to get into this with someone who cannot get bank financing.
30 years is out of the question, most will insist on a balloon of 2-3 years.
Stevens Point, WI
In Texas the Texas Real Estate Commission or TREC, has these forms already available for us to use. I know you don't want to be referred to websites but there might be some good information for you to view on the forms. Just search for TREC or Texas Real Estate Commission. There is a seller financing addendum. We also have a place in special provisions on our contracts where things can be written in. We have to be careful though as to "not be practicing law" since we are not attorneys. The refinance part is also covered in this form. Does California have standardized forms for contracts? If so, I would use the standarized form and in special provisions put the Broker ________________ is representing the buyer only in this transaction or vice versa. It may be something to get legal advice on also, and find out what an attorney would charge to draw up the paperwork. Good luck!
Pete X with X Group Real Estate Advocates gave you a lot of information. There are standard forms for owner financing BUT it is important to get the terms right and include all the clauses needed. If both parties are not very experienced lawyers should be hired.
hire a lawyer to develop strong contract fair to all parties
Ask an attorney for guidance.
I always advise sellers to just say no.
1 - local re attorney
2 - local attorney
3 - local mortgage lender (stiff pre-payment penalties)
4 - local rules and reg's, or agian good re attorney
These questions are beyond an agents scope of responsibility and legal license. Getting involved in such discussions creates unnecessary liability for the agent and the real estate office. These are attorney / accountant questions.
Sounds like an attorney should be consulted
I advice clients to talk to an attorney.
This is something to discuss with a real estate and tax attorney to see if it is advisable for the risk and with today's interest rates. Don't try to reinvent the wheel.
I agree with some of the already provided responses that this is far too complex and a legal issue to provide detailed answers.
With the low interest rate environment, I would expect no one is doing this
Most of the home sellers are not interested in carrying a mortgage.