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We bought a house in 1998 on a contract for deed. They continued to carry after the balloon payment was due we never signed another contract. Now three years later we get a letter saying that there is not enough money in the escrow for the insurance and taxes so they need $9000.00. They also want us double our original payment saying that 392.00 a month for insurance and 356.00 a month for taxes. Is this legal we don't know where to go from here.
Since you did not complete the contract by paying the balloon payment, they can void the contract at any time, basically turning you into a renter that can be evicted and they can take back the house.
So what I would do is a) get an accounting of why there is such a shortfall in the escrow and what the taxes and insurance cost. You also need to go over your contract as to what happens if you don't pay the balloon and about the escrow.
If you have been paying the same escrow since 1998, someone was asleep at the switch, but I think you are going to be held responsible.
You should also look into seeing if you can get financing for the remainder of the contract and turn it from a contract for sale into a mortgage.
Ok so basically we are screwed... thanks we will try to consider all your information thanksQuote:
Originally Posted by ScottGem
Well I wouldn't say you are screwed. I think you screwed yourselves, by not fulfilling your end of the contract or getting them to rewrite the contract when you couldn't. I also think you may have been very naïve to think that what you were paying for taxes and insurance hasn't gone up since 1998. You had to think that eventually they would catch this and you should have been preparing for it. Now the other shoe has dropped and you are caught with your pants down.
Even though the owner was asleep all these years and didn't adjust the escrow payments doesn't let you off the hook. I don't think any court is going to side with you. They might give you some time to come up with the arrears, but that's all.
Well than I guess we were naïve because when the balloon payment came up it was there idea to keep it the same way... so they must have had an motive for there actions... there reputation around here is not so good now that I've been talking to people... we are not in arrears except for the escrow account... even monthly payment has been made since 1998... well thanks again for you time...Quote:
Originally Posted by ScottGem
Then you should have asked for a contract addendum to specify new terms, rather than a verbal agreement. Did they indicate how many payments you would have to continue with?Quote:
Originally Posted by kim proefrock
For example, lets say you were buying the house for $100K. Lets say you were supposed to pay 5 years of $1K per month with a $50K balloon. If the ballon was $50K, do you expect to pay 50 more payments of $1K? Is there anyhthing in your agreement to continue to make monthly payments that specifies how many you have to make?
This is an example of how you are being naïve in not approaching this as a business transaction that needs to have specific terms. I would get yourself a real estate attorney to go over that contract and have it rewritten with new escrow amounts and new terms.
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