[dixiebk]

I have several questions regarding a Contract for Deed on my property in South Dakota that I purchased in December, 2004.

First off, I'll explain, I purchased the property through the owner, real estate agent and did all paperwork through the real estate agent and attorney.

I paid $20,000 down on a 10 acre farm site costing $75,000.00 total. With a ten year contract at 6.75% with payments of $552.00 per month. I'm now looking at possibly refinancing through the South Dakota Housing Authority as I'm on disability but I don't know how they work as my credit is low due to my ex b/f trying to apply for credit cards through my name since he left, he was able to get two which are now unpaid, stole a one of my checks that is now a lien on my property, stole numerous other things and now has been gone for approximately two years. Thank the Lord, and am still looking at how to press charges on him, the police don't want to do much around here. They are just happy he is gone. He believes he has to sign off on a Deed in order for me to refinance the property - my attorney said that he is only on the Contract for Deed and not on the Property Deed so that when I refinance, the owner just has to sign off on the Deed to the new finance company. Is this correct? My ex was not supposed to be on the Contract for Deed in the first place but went into the attorney's office later and signed the Deed after filling the attorney in with a bunch of baloney, no one bothered to contact me. I'm not real worried about this as my new attorney said he's not really on the property but when I receive the Property tax statement, his name IS on that?

Secondly, pertaining to filing my IRS tax forms, being on SSDI since 2001, I have just signed off on the IRS form and have not filed taxes for a couple of years since my husband passed in early 2003, we filed and then I sold the farm we owned in 2004 and everything in taxes owed was finished, now I just sign the form that Social Security sends me (no state taxes in SD) and go about my merry way. However, as I'm looking through the original Contract for Deed paperwork and checking into filing taxes again, or back taxes, being as I pay 6.75% in interest payments per month - doesn't the person that carries my Contract for Deed need to send me some type of paperwork of proof of the interest I paid each year? I looked it up and I cannot remember the tax form number I thought he was supposed to be sending me in order for me to get a tax credit on my taxes. Is this his responsibility to do? He also believes I'm supposed to be sending him an accounting of all my payments, balance sheet and interest paid so he does not have to be responsible for doing any paperwork - he's 83 years old and believes he has no responsibility to me, has threatened to foreclose on me, has sexually harassed me numerous times and done some stalking. This year in June, I wrote him a letter pertaining to his behavior and started sending my checks to him certified mail receipt as I did not want him on my property because of the harassment and his sexual attempts - one example is his suggestion - "we could pay off a little extra on the farm, if you put out a little something," He rents out approximately 8 homes up town and has done this to numerous single females that he has rented to in the past - I know three females he's done this too. Am I doing the right thing by keeping him away from me and so far I have not sent him an accounting of my payment principle and interest but I have it on my own computer but I don't believe I should have to do his work for him as he's rich enough to hire it done. He's an okay man, I guess, just slightly looney. So this section of question is - should he be sending me a form to file my taxes? For tax credit? And am I doing the right thing as far as his sexual advances are concerned? Or should I take them to my attorney and ask that they file charges for his spreading incorrect rumors that I'm behind payments and he is going to foreclose all because I said "NO"? I'm not behind on payments, I'm ahead on payments.

Last, when we did the Disclosure statement with the seller and the Real Estate agent, I've been looking it over, he did not disclose the age of the roof, and I've had a leaking roof for two years and will be replacing at my cost this spring, he did not disclose that the main furnace (there are two) was not working, he stated it was fine and he had had it checked, I've since found out, when he had it checked it was by a "friend" of his that does not fix furnaces for a living, nor is certified, just changed the filters. Also, a pipe caused mold and the person he rented the place to in the past told me they had trouble with mold due to this particular pipe, yet the seller spread a rumor everywhere that my dogs went potty on the tile floor above creating mold in the basement, when in fact it is a leaking pipe. My four dogs are five pounds each and they do not have accidents, and at the times when they have, I've spilled half a can of pop that produces more moisture on a tile floor. I just find this part funny but he spread these rumors to many in the town and has lived here his entire life and I'm new to the area, so people that had been billing me for services, now want cash for each purchase such as the Rexall Drug where I get my medications - which I'm just paying cash now - not a problem - just the rumors are hurting me - been through enough. Also there are many items on the Disclosure Statement that are incorrect and I've found out that the women he purchased this house from were drug user's - specifically marijuana and meth - will this come up in the future when/if I go to sell since I've found out from people I know that they had major drug parties here (which sounds sick, but the seller in his mid 70's was at parties) when he was renting to them. So, the disclosure statement was incorrect on the furnace, water heater, roof, drug/meth use in the home, mold in the finished basement, work on the septic system (was never emptied which he stated, just roto-rootered out the pipes) many statements as to pipes that were new but are not and statements of what was fixed was by certified repair person, which none of the repairs were done by anyone certified, just done by people that once did their own repairs and he had them take care of his rental properties when they owed him money, this is how he works. Apparently he has other Contract for Deed's out there as he used to own thousands of acres of land in SD and still owns numerous houses that he rents out.

I did not have an inspection done on the farm before purchasing. I have replaced many pipes, fixed most of the mold, putting in a new furnace soon, put in a new water heater, and will be putting on a new roof once I have it out of his name and refinanced, including much interior work, floors, interior design, cabinets, etc.

How binding are the Disclosure Statements if I have any trouble with him on signing off on the Deed for the Property? I am anticipating problems and what would happen to the Contract for Deed if he passes before I get it refinanced? He is 83 yrs old, no living relatives and he has no will? He is healthy - but then he is 83 years old!

I'm working to get my credit straightened out and am hoping by April, 2008 that I can finally refinance using the South Dakota Housing Authority refinancing, or would I just be better off walking away and looking for property in the south come this spring (could put my monthly payments for the next six months towards a new down payment) and stop making payments to him? Yes, I'd be out a lot of money but have I gotten myself into such a situation that I'm throwing money at a lost cause? My mother believes I should just walk away. I'm not even sure if the property is worth more than what I still owe? SD small town hobby farms - with a nice home - but they don't tend to bring much money - two homes sold up town for $16,000 last week - wish I would have known - possible pheasant hunting farm although. I have a four bedroom, four bath home, attached garage and large steel building, and shops and barns on the property in fairly good condition. I've thought about this for over a year and found this site with terrific answers that I thought I'd try - sorry some of this probably should go in different areas.

I've paid off roughly 37-45% of the property.

Thanks so much for any help. Dixie

[excon]

Hello d:

Have you ever watched Judge Judy?? She can reduce the case down to its essentials in THREE sentences.

If YOU could do that, I'd read it.

excon

[ScottGem]

If you have a contract for deed, you do not own the property. Therefore, you do not have a mortgage and your interest is not deductible so the owner does not have to send a 1099-Int. You also do not own the property so even though you may pay the taxes, you don't get a deduction.

If you have a contract for deed, then the b/f doesn't have to sign anything, if you obtain your own financing to pay off the contract. If you can do that, you will then have a mortgage and the deed will be transferred to you after you pay off the contract. Only when the deed is transferred to your name do you get the tax benefits of a mortgage and paying real estate taxes.

As for the disclosure, you should have had an inspection done. However, if you can prove he was aware of problems that he did not disclose, you should be able to sue for the cost of repairs.

[Fr_Chuck]

OK, I am sorry I read about half and it sort of got blurry. You need to ask your tax question separate in taxes.

But if this is a real contract for deed, you did not get a deed at the time of signed the contract, the seller holds the need in his name and all that happens is when the contract is completed, you pay it off completely then he signs the deed over to you.

So your ex is still on the contract he has all the rights to complete the contract as you do, it isnot a deed he will need to sign but he will need to sign a release that signs away his rights to the contract.

If you got the deed and registered it at the time you signed the contract, then this is not a contract for deed but a owner finance.

The interest payments on a contract for deed are not normally deductable, since you are now just buying a contract not the property, since you don't own the property yet.

Simple solution to the issue if this is a real contract for deed, and you do not have a deed but just a contract. It will require the seller to work with you. Don't pay him for two months, you are in default of the contract, most contracts have that a contract for deed changes to a rental if you are in defualt, then you are not renting the house not buying it, and you pay him the back rent, and are free to buy the house, your ex will be notified of the defualt and have the right to pay on the payment if he wants to, but I doubt he would, since that just still gives him and you contract rights.

I believe you completely misunderstand what type of purchase you are making. You can not have the deed and have a contract for deed both.

[dixiebk]

May be able to better explain in the last part of this message - PAGE DOWN. LOL - new to this site, please be nice as I'm an old lady and I cry easily. *joking* Everybody gave really good answers and things to ponder upon.

It is an official Contract for Deed, registered with the county offices as per the attorney that drew it up with Real Estate Agent, myself and the seller. Paid $20,000 down, payments of $552.00 per month for 10 years 6.75% interest, with option of refinancing at any time. I don't have the Deed but am listed as owner or owner of Contract per Deed per county office and pay the taxes.

I will ask the tax questions in that section, as through researching, I found with a Contract for Deed, the seller is required to file a tax form as he receives payments - not a 1099, I will look up the number again - is like a 1274G, 1264 or something or other, according to Statutes in SD there is a form he is to give me at the end of each year.

I received two different answers as to getting the ex off the contract? All the laws pertaining to Contract for Deed's filing are different per state. Are there federal statutes pertaining to Contract for Deed? TX has the most clear Statutes pertaining to Contract for Deed's from my hours/weeks of research. The owner says he will not sign the property over to the ex and would fight him, just worried as to the age of the seller, plus the ex is now wanted in this state. He won't be back.

I plan on refinancing this spring, wish me luck, due to my disability it can be difficult and as I still own a percentage of the large family farm, I don't believe I can tie up collateral from state to state? Sorry, I can't explain anything in three sentences and Judge Judy is great fun to watch, and wish she could help me explain in three sentences! LOL My ex can't pay a phone bill on his own, so no worries there of him taking over, just that he moved to another state, the law wants him, and he has no listed address as per attorney, or I'd be sueing him for the $40,000 he owes me.

I've never read anything legal that was stated in three sentences. My apologies. Just relaying information from what my new attorney told me vs. perhaps what another might say.

My first questions here, I'll learn this site sooner or later, probably later. :o :D

Three questions, like Judge Judy - giving this a try???

Seller misrepresented the property on the Disclosure statement to myself and the Real Estate person selling the property......... Filed Disclosure State with the Contract for Deed, many discrepancies.

Re-financing - will ex have to be contacted as he's been gone for 2 years with no address for him unless hire fellow tracer, does he need to sign off "release" on the Contract for Deed if I refinance or is that only on a Deed?

Owner is 83 yrs old, what would happen if he passed before I refinanced, he has no will and no relatives - ? Deal with State of South "By God" Dakota on this then? Yikes!

[dixiebk]

Whoa! Sorry for the long explanation up top - brand new dumb bunny to this site! Read what I wrote in red. Judge Judy has no worries on me competing for her job! LOL

[Fr_Chuck]

The current contract is binding, so unless there is some default in the contract that voids it, your husband will have to sign a release of the contract to stop it. If not, he can come back and still claim 1/2 ownership of the home latter, since to him, this is still a valid contract and if you act on, without him, also not up on your law in your state exact, but often just being married, requires both parties to sign real estate contracts, so the other is at least aware of the contract.
So you need to go to divorce court, file for divorce and get court ruling, giving you all the equity of the contract, remember the contract has value, all of the equity you have gained even if 10 dollars is a value to be discussed in divorce court.

If the owner passes away, his estate is required to honor your contract,
Now if the property is foreclosed form a loan he may have on the property, then you could end up losing it. And everyone has some relation, why not see if he would will the property to you when he dies, I have know of that happening. But if he would die a third cousin or someone would still be the closet relation.

At least here at the court house, all you could do is file the contract, showing it as a lien on the deed, (which is not normally done around here)there is not as far as I know any change in the deed.
Also since you are not acually buying the house, but buying the contract, the actual sell of the house does not happen till you trade the contract for the deed, since it is the change of the deed that makes the sale.

Also remember that also in most taxes and insurance money are put in escrow and the name on the taxes don't change only the address and a payor may be listed but the seller is still always the listed owner still.

And to be honest normally you have to remember you don't own the house, and this is a contract for deed not a mortgage, And this interest is not by strict view point deductable. If you were the owner of the home, you can deduct it, but you still don't actually own the home.

And it happens everyday on contract for deed that one party of the other will not sign off on the deed, if they don't, you have to take the owner to court to inforce your right, and your completed contract would be proff.
So keep every payment record and proof of every months payment.

Again you are confusing owning the house, and buying a contract. And of course made a large error in not having it inspected.

I sell properties all the time on contracts of deed, most are sold to people who can't get normal mortages for credit reasosn, people who sell like this normally do so expecting to take it back, If people actually paid me, on time and I did not get to go into default with them I would not make that much money off it. People who sell on contracts normally expect to sell the same property 3 to 5 times before they finally end up selling it for good. So remember every clause in that contract that can put you into default, the minute you are in defaut they can take the contract away from you and you lose everything you have paid to date.

This is not like you buying the house and they are holding a loan, it is much easer to take the house back on a contract for deed

[dixiebk]

The ex is not my husband. He was an abusive felon that conned a woman that was a widow -that would be me.

I paid extra on this place as many people do in South Dakota so they don't have to go the long route through the bank. I checked with all the laws pertaining to Contract for Deed in buying a property and the seller financed the Contract for 10 years and if I pay the full ten years to him, the property will be paid off,but oops - he will be in his 90's if I don't do Conventional Financing, which by the way he wants me to do. I just would like to lower the payments and get back to a regular mortgage so that I can use the equity. I know the State of Texas has really clear laws on a Contract for Deed and most of their statutes that have been challenged (improper wording here) if Seller tries to take the property away from Buyer and the person has the property paid off by at least 45% and the Contract holder decides to take the property away for any reason, the Seller has to repay the debt to the Buyer, minus I'm sure of any damage done to the property. Or they have to offer the Buyer the same situation as if the Contract for Deed were a regular Mortgage - the six months, with Sheriff sale, or give the buyer back the money - further information. That's according to TX State Statutes that people are using in court in other states as examples of cases won. (Totally wrong wording, sorry have a cold and head's all clogged up along with thinking) I read case law on several Foreclosure Cases of Contract for Deed.

You've given me so many new ideas to look up to find other statutes as you guys mentioned not all states call them Contract for Deed's. I know Minnesota does, but I believe someone called it a Land Contract? - going to have to read back.

So much interesting information here. Wow! Is everyone here an attorney? I bought from an old man and his wife that have lots of rental properties in the areas. He sold out thousands of acres in the past 10 years over Contract for Deed and most of them now being paid off by "Big Money" people. He's 83, his wife deceased, no children, his parents had no relatives/siblings and as he is 83 - no one is alive anymore, so just wondering what I'd have to deal with if time is an issue due to his age.

I've spoken with him in the past about helping him with a simple will, like what I had with my late husband according to SD Statutes instead of MN, which are very much alike. He's a rich old man - sort of eclectic, strange, they call this little old man "The Viagra King" LOL. He's a good man, I just did not want to deal with his advances so set him straight in a certified return receipt letter, copied to my attorney. I have no intentions to sue him for anything and told him so, as long as he and I can agree to talk about situations, the last six-seven months, he's been much better. This man sort of adopts all kinds of the "lost souls" in this little area. I'm not a lost soul, just a retired Business Woman. LOL

So, Fr_Chuck, if you sell on Contract for Deed all the time - do you have any properties in the Arizona area? I'm looking there also.

I could have gone traditional financing with $20,000 down on a $75,000 10 acre property with large home and buildings, it was worth more but the prices are just going up in this area, so I sort of consider I got in on the bottom floor in this area, even though I paid more. I wish I could have been liquid enough to buy the last two nice homes in the local town ($16,000) a piece - a steal when new large Ethanol plants are coming into the area all over and upping the rate of pay for the area - there will be lots more people looking for local housing.

I'd prefer to leave this property on Contract for Deed for at least another 6-12 months, due to the large family farm I am in the process of inheriting 1/3, because I don't know the situation of what my mother has left in financing on it and would rather have this property "under the wire" so to speak until we get eveything in MN straightened out in case I need to borrow against the MN property for pay-off's there or something. I prefer to keep the properties in two different buckets. I've never been behind on any Contract for Deed payments and no intentions to do so. The Minnesota property will be sitting in estate for quite some time with a ton of Inheritance tax to be paid due to the way my mother left the will. She paid $50,000 in Inheritance Tax after my dad died in 1975 and always told us three kids, we'd end up paying at least $100,000 in Inheritance tax when she died. She took those Estate Classes but she never listened to us.

Thanks for all the information! Keep it coming and I'll keep reading here - very interesting! Dixie

[dixiebk]

Oh Damn! Went to hit delete on a bunch of that, and it posted instead. Sorry. Know you hate long posts. Taking my clogged head back to bed. LOL

[dixiebk]

Fr_Chuck - do you really expect to go into all Contract for Deed type of sales thinking you will get the property back?

I thought that selling via Contract for Deed was a good way for the seller to not have to pay as much tax and that is why people do it that way, not just cause they have trouble getting financing? At least, that is what the Tax Attorney and regular attorney told me?

I live in such a small area and we don't have many new people coming in to buy - new people few and far between, just locals wishing a better home or farms selling out to the Pheasant Farms looking to expand or local rancher's looking to expand farms and ranches.

Just wondering if the way you look at Contract for Deed's is the way most people look at them in larger areas?

[braveheart07]

Filling a lien