Am I missing any paperwork on this deal?

I am buying a 2/1/0 Small House on slab about 800 sq.ft. on 1/4 acre lot, in a private fishing community, 2 stocked lakes. Two houses in same neighborhood, a 1/1/0 selling for $45,000 (7 DOM) and a 2/1/0 selling for $55,000 (90 DOM).

I am paying $8,000 for the house, putting $5,000 in fix-up and plan to sell for $39,900. Buying with Owner Financing, $800 down (10%) and 24 payments at $300/mo, No Interest. Unsecured Promissory Note. Of course, I plan to flip ASAP.

Is there something I need to do (paperwork), other than a Sale & Purchase Agreement, recorded General Warranty Deed and Promissory Note? No HOA, but water club. No past dues, and 2008 taxes paid up. I don’t plan on Title Insurance for the buy, but will for the flip sale. Records show same owner for over 8 years. I’m just trying to close without Title Company.

My only other worry is title seasoning for the sale.


My only question would be why you don’t want to use a title company for an $8K purchase to protect yourself? You are talking a few hundred dollars for the title search and insurance for an $8K purchase. My vote would be to protect yourself and do it.

Also, what about property taxes? Are they paid for the year? and do you have to pro-rate it for the rest of the year? What about utilities? If they are not paid in full at closing, they could potentially put a lean on the property. Not that it is likely to happen, but it is a possibility.

Also, PAY the local RE Attorney the $250-$400 bucks (which is deductibile) to remove all doubt and ensure you are protected. $500-$600 should cover the attorney, title search and title insurance, especially if you have an attorney which covers all the bases… money well spend (and later deducted) IMHO… If you are willing to put out $5K to rehab it, you should spend 10% of that amount to protect yourself… it just makes sense…

Just some thoughts…

Ricky, How do you figure its an unsecured promissory note? Herbster


AS I understand it, the seller normally pays for and is the one protected by title insurance.


It would be an unsecure promissory note, since that is how I would write it.

RDO, this is the reason why you want to pay the fee to the attorney…

The buyer or mortgage company performs a title search… just because nothing came up does not mean that there is nothing getting ready to be attached that you don’t know about…

You can negotiate the seller to pay for it (not usually), but they can tell you the title is clear, but without a title search and subsequent title insurance you are taking a risk.

Again, it is worth the few hundred dollars to have an attorney who specializes in real estate:

  1. Do a title search (any back taxes or other surprises?)
  2. Arrange title insurance (although you can do this yourself, it will go alot smoother if you use the attorney and his resources.)
  3. Have him review your loan doc’s, especially if you are writing it as an unsecured promissory note.

If you go into it without protection, you limit any recourse.

BTW, anybody who would have a problem with you using an attorney usually has something to hide…

This is a situation where it pays not to be penny-wise and pound-foolish…

RDO-how do you intend to write an unsecured Note? Is not the Note secured by the property? herbster

make sure you get an earnest money deposit form and get YOUR closing attorney to create the deed and promissary note/mortgage. Spend the $200 on title insurance. Secure the promissary note on the house.

Big question ask your self is if the other houses in the area are actually selling. How many have been sold from private owner to private owner in the past 6 months (look at tax records for comps). A 2 bed room house is never a great deal, even for a low price, especially since your exit is to flip it. The demand for them is no where near as high as it is for 3 bed -2 bath homes.