Contract for Deed
I was talking with a client today who is controlling a property by using a contract for deed. These are referred to in some areas as a land contract. The owner was in default on their mortgage and had moved away. The owner was willing to sell the property on a contract for deed for the amount owed on the first mortgage. The buyer began making the monthly payments and had leased the property after doing some repair to the property. He had nice monthly cash flow after making the contract payment to the seller’s lender.
The issue came up when the lender contacted the owner/seller about the escrow account being short and demanding the owner pay additional funds. The buyer has no access to the information directly from the lender and is trying to get the owner to work with him. He wished he had gotten a release of information signed by the seller when the original contract was signed. If he had done that he could get info about the loan balance and escrow account without having to go through the seller. It is good to learn from another’s mistake. Always get all the documentation you think you will ever need in the initial agreement.
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