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SR4479 · Nov 12, 2009, 01:33 PM

I have a rental that I wish to sell on a land contract. My mortgage company has a due on sale clause. I am having a lawyer draw up the contract. I realize that I don't have to register the land contract and wish not to due to the clause. I will tell this to the buyer. I will ask the lawyer to write up something extra to give more security/proof/legal right to the buyer without having to record it. My question is: Can they get the exemption by taking the unrecorded landcontract and the exemption form to the tax office? Will this work?

Thanks,
Scott

excon · Nov 12, 2009, 05:20 PM

Hello SR:

No. The buyer isn't eligible for the first time buyer credit, because they aren't a buyer. They are only agreeing to BE a buyer sometime in the future.

When that time comes, if the credit is still available, the buyer can get it then.

excon

ScottGem · Nov 12, 2009, 05:37 PM

Have you checked with your lender? A Contract for Deed doesn't normally trigger a due on sale clause, since the property is not changing hands.

Not sure what tax exemption you are referring to, but since the property isn't changing hands until the buyer completes the terms of the contract you are still responsible for the taxes.

Fr_Chuck · Nov 12, 2009, 08:32 PM

First don't start telling the lawyer what has to be in it,
Most land contracts are not recorded anyway, and if it does, it merely shows a contract not a change in ownership.

They are not the owner, while your contract may require them to pay YOUR taxes, it is your taxes not their taxes, since owner ship is not changing.

No since it is still your taxes, THEY can not be exempt.

Remember the house does not sell, till the contract is complete. And my guess about 90 percent of contract for deeds never complete and most end up going back to the seller.

** not all of course ( since I buy a lot on contract) but in general people who buy on contract can't get a loan, don't have enough down payment or more, so you are doing a contract normally with someone who is high risk.

Telling a buyer too much, may even scare them off, and there is no reason to "give" them anything more than a good legal contract