[famlee]

My husband and I were not able to obtain financing through a bank or mortgage company due to not realizing the importance of good credit when we were teenagers. However, as we were a bit older and more responsible, we wanted to buy a home and had the money to do so. We couldn't find anything listed in the right school district so went driving around, as it isn't uncommon in this area of Missouri for sellers to sell themselves and do owner financing.

We found a place. It was a mobile home with 3 acres. BEFORE we ever looked at the place we specifically asked, "Are there any restrictions on the land?"

The answer we got was, "Yes

1) If you build, it can't have a flat roof.
2) Your home must face the road.
3) Your home must be at least 200 ft from the road.

We'll get you a list of all the restrictions."

The seller was only here in Missouri for a visit, they lived across the road from the property we were looking at, but travelling back and forth to CA for cancer treatments.

They were leaving one week after we found this property and wouldn't be back for 4 months, so everything was rushed.

The selling price was $24,000. Down payment of $7,000. Monthly payments of $314.94 for 72 months. Interest at 10%. Any payments over 15 days late were to have a late fee added of $25/100 dollar late fee. If payment is 30 days late the sellers had the right at any time thereafter and without notice, declare all remaining unpaid principal and accrued interest immediately due and payable in full.

As we were rushing to get all the paper work done before they left, we didn't have an attorney look at anything. And we probably didn't read the paperwork as thoroughly as we should have or asked the right questions. Was our first time buying, was rushed as we needed a place ASAP.

The only times we were late was:

A year ago, my husband was laid off and we made our payment that was due 8-5 on 9-1.

The next month, September, they moved from across the road to CA permenately. We did not have their new address or phone number. So we had no way to contact them or address to send payment until they contacted us in October. As soon as we got their address, we sent payment. But because of this we didn't technically make payment until 10-15, and was due 9-5.

All of our payments were on time after that or within the 15 day grace up until August this year. Our air system went out and we had to replace it due to the extreme heat. We called and they said OK, no problem. Payment due 8-5 was received by them on 8-23.

After they got the August payment, since it was so close to due date for September, they didn't mail our "loan pass book" back to us. Was waiting for September's payment to send it back. However, their address and phone number is in the pass book. I didn't ever think to write down anywhere else. I have since learned. So, they waited until the 15 day grace passed to call and ask for our payment. I explained why it wasn't sent. She gave me their address, I mailed it. When she got my payment and mailed my pass book back to me she informed me that we owed a $50 late fee for August and would waive the late fee in September due to the circumstance.

Ok, at this point... as she had NEVER charged us a late fee, I forgot about it even being in our contract. Due to remodeling, I had almost everything in storage, including my contract. I wanted to read my contract before I just paid a late fee that I wasn't sure was even addressed in contract. So, I mailed out my October payment. They received on 10-13, due 10-5.

Now, I get my pass book back today and it list under amount paid $289.94 and written next to it is "late fee owed, $25.00" and then an arrow pointing at the $289.94 that says "late fee will be owed". I paid the full amount of payment $314.94 as I have every month.

So, I am assuming she took $25 of what I sent and counted it as a late payment for another month and is charging me $25 for my payment not being in full this month due to her taking $25 off for a "late fee".

She then wrote in the book, next to each month I was late by 10 days or more, "late fee".

Ok...

First she says, we owe a $50 late fee, then charges me a $25 late fee.

The contract says "15 days late, not 10 days late"

The contract also states "Late fee of $25/$100 late. So if my payment is $314.94, would my late payment be $75 or $100?

If she has never mentioned the "Late fee of $25/$100 late. So if my payment is $314.94, would my late payment be $75 or $100?

If she has never mentioned the " before on the months where I was late over a year ago, can she now charge me?

And... since one time a year ago we were over 30 days late, can they at any time tell us to pay in full or get out?

They have never given us a list of restrictions as they said they would. Now, we are finding out about a new restriction every time we turn around, restrictions that were always there, they just didn't tell us about. We find them out from the person who originally owned the whole lot of land and split it up in 3 acre tracts and sold them. He is the one who placed the restrictions on the land.

Seeing as we specifically asked about restrictions and were not told the truth, is there anything we can do about it?

We are going to go speak with an attorney in a few weeks, just wanted to get some advice from others first.

I'm sorry this is so long, I tried to put in anything that would help someone answer my questions. Sorry if I've put in too much information.

Thank you for taking the time to read this. It is so very much appreciated.

[MarkRealEstateConsultant]

First, read the contract so there is no misunderstanding about payments and late fees. I do not understand what the late fee is - I've never seen $25/$100. There are state laws regulating the amount that can be charged for late fees, usually around 5%. I do not know the laws in Missouri.

The contract is the first governing document - as long as it stays within the state laws it will take precedence.

Key information an attorney will ask for:
Contract
Documented payment history (the loan payment book?) cancelled checks
Chronology of events (like the one you posted above) Just as a note mail your payment to the listed address in the contract until you are notified of a different address - if it comes back due to a bad address keep the envelope - it proves you attempted to make your payment.

Regarding assessing late paysments in arrears (after the fact) - I generally don't see that happen. The owner accepted a payment noted that it was applied to principal and interest and sent the book back - I think I could argue that this constitued acceptance.

Regarding the land restrictions - relying on the sellers word is dangerous but may stand up if a lawsuit were filed. I'm not an attorney but I see this type of thing happen.

Advice to all readers - never be in a rush to enter a contract. It's a binding agreement that you must live by with some exceptions.

If you have been late according the contract terms and the seller can prove it, you may be liable for default of contract. Based on what you've written I'd advise you to see a local real estate attorney, pay your payments a few days early (and get into the habit of doing so) and really understand what your obligations. I's also demand a copy of the land restrictions from the seller (but thet are available from other owners / neighbors and should be filed with the county courts too). Pursue all avenues to get the documents.

This is an ugly situation but one that shouldn't end up with you losing your home.

[ScottGem]

At this point they have said nothing about calling the loan, correct? I agree with Mark, the $25/100 is confusing. I would take that to mean $25 per $100 dollar of payment. But that might be over the legal limit.

But I would not take any chances here. I would ask them to define exactly what you late charge is according to the terms of the contract. And then pay for any late payments. In the meantime I would be looking for financing of your own and pay off the contract.

However, from what you said the contract is favorable to you. Most contract for sale deals would say that if you are late, the property reverts back tot the seller and all monies paid are forfeit. They could them declare that and tell you to get out, but if the contract only states that the balance is due in full, that gives you the opportunity to pay off the balance and keep the property.

[famlee]

Mark,

First, Thank you so much for your reply.

OK... word from word from contract:

"Payments not received within 15 days of the due date will have a $25/100 dollar late fee."

I read it to mean that for every $100 we are late, there is a $25 late fee. By that reasoning, with our payment being $314.94, then that would be a $75 late fee, unless $25 is charged on the $14.94(amount above $300) as well, making the late fee $100.


Since I sent full payment of $314.94 for my October payment, are they allowed to deduct a $25 late fee for being late a previous month and then charge me a late fee for not sending a full October payment?

My husband and I have the feeling they are wanting us to let them have the place back. They had NEVER had a problem with us being a few days late until just recently. And when we first bought place we had told them that our plans were to build a house. We have everything we need to do it, but we're afraid they'll come take place once we do. She keeps calling our neighbors asking if we've built our house. Don't understand her being sneaky about it and just not asking us.

Again, thanks for your reply. It is appreciated.

[famlee]

Scott,

Thank you for replying.

At this point no, they haven't said anything about recalling the loan. In fact, last year when we were behind (due to not having an address) when we sent the payment, we wrote them a letter and specifically said, "Do you want us to move out and let you have the house back?" We knew what our contract said and we were 30 days late. They called my mother's house and talked to my mother and told her that NO, they didn't want us moving out for being late.

We are hoping to get financing in our name through a structured lender in Jan. We have a few more things to get straight. We've been working really hard at getting this done.

I googled Missouri late payment laws and the only thing I came close to is this:

SENATE BILL NO. 683

"3) If the contract so provides, a charge for late payment on each installment in default for a period of not less than fifteen days in an amount not to exceed five percent of each installment due or [fifteen] twenty-five dollars, whichever is less; except that, a minimum charge of [one dollar] ten dollars may be made. If the contract so provides, a charge for late payment on each twenty-five dollars or less installment in default for a period of not less than fifteen days shall not exceed five dollars;"

I'm not sure if this applies to my situation.

Again, thanks for your reply. It is appreciated.

[famlee]

In addition,

I am not sure if this has any bearing on the situation, but our contract was not notarized. Their daughter signed as a witness, but that is it.

Is there a time limit they have for enforcing the contract terms when we have broken the terms? What I mean, is yes we broke the terms by being over 30 days late due to not having an address, but that was a year ago. I'd think that if they didn' have a problem with it then, the judge would not understand why a year later, they want us to move out for not keeping within the terms. Like I mentioned, they haven't said nothing about doing this, but I keep getting an uneasy feeling about them. They had mentioned that they had sold the place several times and the buyers kept moving out and letting it go back to them, is only making me wonder if there was a reason. Maybe, when the place would almost be paid for, they'd say well you broke the contract X months ago, so now move out.

[ScottGem]

I read the lat charge the same as you. But from your research it would appear that the charge is against the law.

As for building your own house, DO NOT start building until the deed is in your name. I'm assuming here, that the deed was not transferred to you, as is typical in a contract for sale. It could very well be that they are waiting for you to improve the property and then will somehow try to get you off. So you need to either wait until the 72 months is up and you have paid off the contract or obtain your own financing and pay it off. But you don't make any permanent improvements until you have clear title.

[famlee]

After the research and what I found, I was under the impression also that the late fee was against the law. However, I am scared to say anything because I don't want them to pull the land back from us, due to us being late over 30 days a year ago.

You are correct, the deed was not transferred to us.

We definitely are not going to build anything permanent until the deed is in our name.

Thanks again for your advice.

[MarkRealEstateConsultant]

If the sale wasn't recorded with the county and the deed (warranty or quit claim) wasn't transferred to you - Who has been paying the taxes? It's the responisibility of the owner.
Please get an attorney and show the seller that you are 1) trying to abide by the agreement and 2) you may find that your state laws have been violated by the seller.

It's important that you show the seller that they just can't do what they feel like. Have the attorney call the seller to task. Doing nothing permits the seller to continue their actions.

Good luck

[Fr_Chuck]

There is no legal requirement to be notorised, I do a lot of my contracts by fax machine even.

Next I will assume you have taken and recorded your contract at the court house, this will show legal rights to the property and protect your interest from them selling it to someone else.

As for other restrictions, first lookup the deed at the court house most restrictions unless you are in a HOA will be listed in deed retrictions on file.

Have you just called them and asked them the deal, often it may be a misunderstanding,

[famlee]

If the sale wasn't recorded with the county and the deed (warranty or quit claim) wasn't transferred to you - Who has been paying the taxes? It's the responisibility of the owner.
Please get an attorney and show the seller that you are 1) trying to abide by the agreement and 2) you may find that your state laws have been violated by the seller.

It's important that you show the seller that they just can't do what they feel like. Have the attorney call the seller to task. Doing nothing permits the seller to continue their actions.

Good luck

We bought in November, they said they'd pay 90% of that years and us 10%. Then the next year we paid the taxes. They just told us how much and we sent payment to them. Coming up will be the 2nd year we pay.

As far as I know, nothing has been filed with the county. If it has, they done it. I wasn't aware of the need to file the contract anywhere.

[famlee]

There is no legal requirment to be notorised, I do alot of my contracts by fax machine even.

Next I will assume you have taken and recorded your contract at the court house, this will show legal rights to the property and protect your interest from them selling it to someone else.

As for other restrictions, first lookup the deed at the court house most restrictions unless you are in a HOA will be listed in deed retrictions on file.

Have you just called them and asked them the deal, often it may be a misunderstanding,

No, I haven't take the contract and recorded it at the courthouse. Was not aware that I needed to do so.

I haven't called them and said anything about the recent events with the late fees due to I am afraid they'll say we must pay in full within 30 days or vacate since we were 30 days past due that one time last year.

As for the restriction list, I haven't asked them for it yet. I mean I asked when we bought and once after. I am going to drop a letter with my next payment and ask for that again.

The contract we filled out isn't fully typed up. They used a fill in the blank and used white out, crossed things out, etc because they didn't have the final typed up one yet. Said they'd get a new one all typed up and we'd sign it again, this one would work for now. Is this contract legal?

Thanks for your reply.

[ScottGem]

Yes the contract is legal, but some of the provisions may not be. If handwritten and white out changes are made they have to be initialed by both parties since changes could have been made after the initial signing.

Also you need to make sure that the taxes were paid.

[famlee]

Yes the contract is legal, but some of the provisions may not be. If handwritten and white out changes are made they have to be initialed by both parties since changes could have been made after the intial signing.

Also you need to make sure that the taxes were paid.

Would the court house be able to tell me if the taxes were paid as my name is not on the property?

It's only initialed in one spot and that is from the seller. Their copy and mine are exactly the same, so if one of us made changes after the signing, then the other could prove that right?

Do you know if she was allowed to use part of my payment for October as a late fee for a previous month and then charge me a late fee for not sending full payment in October?

Thanks again everyone. I really do appreciate you taking your valuable time to respond on here and help people like me out.

[famlee]

Would I take my contract to the recorder of deeds office to file it in the county courthouse? Is filing it something I can do or I'll need an attorney to do?

[ScottGem]

You can do the filing. You should also be able to find whether the taxes were paid or not. If they give you a hard time on that, show them the contract.

[famlee]

Thanks, I'll go do this next week.

If she was to say that she was taking the place back because were over 30 days late one time last year would she have to go through the court to do that? Or could she just " you have to leave and let us have the place back."

Do you know what state office I would contact to find out for sure what the legal late payment fee is?

And

Where I could find out (other than an attorney) if her taking part of my October's payment for a previous month's late fee and charging me another late fee for not sending all of October's payment(due to her deducting the late fee from it, I sent full payment).

I was thinking that the attorney general's office might be able to answer these, any idea?

[ScottGem]

First, it is legal for her to apply late fees like that. Unless a FULL payment is received by the due date, the payment can be considered late. Past due late fees can be taken out of a payment off the top resulting in the current payment not being a full payment and making it late as well.

Second the AG's office would be a good place to start for info on legal late charges and such.

As to calling the contract. As I said previously, that clause is very much in YOUR favor. If they do call the contract, you still have time to obtain financing and pay in full. They can't say they are taking back the property. They can only say, you defaulted on the contract so now you have to pay the balance in full OR we take back the property. To then remove you, they would have to go to court (unless you voluntarily left). So you would have time to get your financing. You could also argue, that they didn't exercise that clause immediately and allowed you to get up to date, I think you would also win on that one.

[famlee]

First, it is legal for her to apply late fees like that. Unless a FULL payment is received by the due date, the payment can be considered late. Past due late fees can be taken out of a payment off the top resulting in the current payment not being a full payment and making it late as well.

Second the AG's office would be a good place to start for info on legal late charges and such.

As to calling the contract. As I said previously, that clause is very much in YOUR favor. If they do call the contract, you still have time to obtain financing and pay in full. They can't say they are taking back the property. They can only say, you defaulted on the contract so now you have to pay the balance in full OR we take back the property. To then remove you, they would have to go to court (unless you voluntarily left). So you would have time to get your financing. You could also argue, that they didn't exercise that clause immediately and allowed you to get up to date, I think you would also win on that one.

Ok, thank you very much. I really do appreciate all your help.