Trying to find the very best way for both parties to get around the Due on Sale Clause on a Contract for Deed sale . Right now the Seller is protected by the Deed. Buyer is not protected at all if something should happen to the Seller. Is Land Trust the only way? Help needed.
Number 1 “Best Way”…
- Don’t ever make a late payment.
BTW, we use Land Contracts because they do not transfer title to the Buyer (except in California). We also don’t allow buyers, in Land Contract deals, to record anything against our property, otherwise it defeats the purpose of a Land Contract, since we must then sue to get the lien removed.
Well, that’s like foreclosing, only worse. We then have to prove there’s no equitable transfer of interest; prove the buyer was defaulted; prove we have a position; prove the contract shows the remedy for both the seller and the buyer, and that one, or the other, has not broken the law/contract in the first place. By that time, we’ve been making the buyers payments for 18 months.
So, just make sure the payments are made ON TIME, and that you haven’t transferred the deed to the buyer until he pays you off, and make sure the buyer does not record anything against the property.
The question comes up: “Why would a buyer agree not to record anything against the property?”
Because it’s OUR DEAL and OUR TERMS. If the buyer wants to record something, we understand. And we explain, to the buyer, all the other opportunities where he can find sellers willing to accept his inability to handle his finances, and then let him record the entire tome of War and Peace, if he likes.
But if he wants this nice house, for this price, and these terms, he’ll just have to forgo recording anything.
Otherwise, there’s probably a double-wide seller out there, just begging for a buyer, that’ll finance him, and allow a lien to be recorded against his coach.
The buyer should make the payment direct to the lien holder if a broker is involve to protect the buyer.
I’ll give you $1.00 if you can get any sub2 deal completed through a estate agent, or broker. That doesn’t happen. I’m not willing to risk more than a buck to prove my point however! :biggrin
One should never, ever, make payments to the original borrower, I totally agree. The better way is to make payments through a note servicer. It’s cheap to set up, and maintain. This way everyone has access to the payment history, and knows exactly what’s going on with the loan. FWIW
javipa my friend you are right. note servicer is the best way to go.
Java and RE seller… You guys got to much time on your hands. You’re always playing on these forums like they are some type of X box.
I’m just saying… :biggrin
I don’t know about RE seller, but I deliberately carve out time to contribute here. It took me several years to really get going and posting anything. However, I use the time to learn to communicate more clearly, and distill my thoughts on various topics, as well as provide as solid feedback as I know how to offer.
That said, there are about a dozen other contributors here that challenge my thinking in good ways; that compel me to chime in even more.
The reason I even considered looking over this site at all was because of John $Cash$ Locke. I thought if John’s here, there must be something worth a “crap” going on.
John is the “guru” that opened my eyes to scripted presentations and negotiations regarding Sub2 flipping. He brought his sales training and negotiating experience to creatively financing real estate, and frankly I had never seen this done the same way. It worked so well for me, and helped me make money in a niche that is about as “hard sell” as one can imagine.
I mean we’re effectively asking sellers to give us their deeds, give up their loans, remain vulnerable to our ability to handle their financing, if not get the seller to trust that we won’t trash their credit.
Try negotiating all that without some kind of scripted approach…
OK, it’s RE seller’s turn at the stick! :beer
javipa,
Mr. & Mrs. _____________ let me begin by telling you a little about (company name). (Present Credential Book) We, as a team, have been buying and selling houses in various parts of the country for over twenty years. To date, we have purchased millions of dollars in property. For those that qualify, we offer a unique opportunity.
Yes, it still works…thank you for the compliments.
John $Cash$ Locke
PS: What is a due on sale clause, cause I never remember seeing one called due.
Ha! Me neither…! :biggrin :biggrin :biggrin