[saeedf]

Hello,

I am a seller who signed a contract for deed with the buyer about 18 months ago. This was his idea and also he prepared the form and all the requirements for it. I never knew such thing as contract for deed till he mentioned it.
We also added in that contract for re-financing after 12 months from signing this contract. Well, 18 months later he can't get approval on his loan and he saying he doesn't have to re-finance. So I am only getting pay for the monthly payment and I have no access to my equity that I established on my house.
I owned that house for 10 years and I have about $26,000.00 equity. He's been paying me about 15 months now.
My question is, can I sell this contract to a third party?

Thanks,
Saeed

[Fr_Chuck]

First you did a lot of mistakes,

1. contract for deeds are not legal in all staes

2. they have to be specific, as to what interest rate you are getting and for what term your contact is for. If the specific contract was exactly for 12 months, then at the 13th month the ballon payment for the balance was due, and you merely forclose on him if he does not pay in full

But if the contract is wishy washy ( a good legal term) and says he can pay off but does not have to, The you are now the lender on the house.

But he does not own the house, he only has a contract for the house, in most cases, you are still the listed deed holder and can actually borrow against the equity. Your only obligation will be to him to give him the deed when he finishes paying at the end of the term.

Most contract for deeds are done one of several ways,

For a 1 to 5 year term with a large ballon to be paid ( a re-finance) or for a 10 to 20 year term.

For the seller what you get is the fact they pay for all upkeep, they pay for all taxes ( you have to bill them for the taxes) and they have to supply property insurance, require to be listed on the polcy as lien holder)

Next you get a ungodly high interest rate because you are holding the loan for someone who can not get credit anywhere else.

If you go down to the court house you will find ( or should find) you are still the person listed on the deed, so what you are actually doing is selling the house to a third party who will have to honor the contract for deed.

If you want to just sell the paper, you have to actually sell them the house, and deed it over to them, with you as lien holder, then as a lien holder you can sell the paper. ( but if no one will loan them the money now, no one will wwant to buy the paper either.

My suggestions, have an attorney read the contract for deed, I will bet you lunch it is not legal the way it is written and you can force them to refiance or you can find a reason for cause to breach the contract.

I sell most of my homes this way, and that is how you make your money, large down payment, they pay for a year or two and you take the house back and resale. Over and over and over.

[Cvillecpm]

You have a tenant and unless the contract is RECORDED against your property, you can re-finance it if you wish.

You should have all of your documents reviewed by an attorney.

[ScottGem]

Ever here the expression; letting the fox guard the henhouse? That's what you did by allowing the other party to draw up the papers. You NEED to get your attorney to look over the contract and figure out what your rights are.

As Chuck pointed out a Contract for deed is a sales contract, not a mortgage. Therefore you own the home, he is a tenant with a right to purchase. As the home owner you can still borrow against the home.

[saeedf]

Hello,

Thanks for all the responds,
I also didn't say in my last question in that contract, he (buyer) indicates "buyer SHALL re-finance in 12 months from the date of this contract". I wonder since he hasn't done that after 18 months, I have the right to cancel this contract and have him out that house?

Thanks,
Saeed

[Cvillecpm]

Yes and GET AN ATTORNEY to review the documents you have signed and get your tenant out of your house.

[ScottGem]

Hello,

Thanks for all the responds,
I also didn't say in my last question in that contract, he (buyer) indicates "buyer SHALL re-finance in 12 months from the date of this contract". I wonder since he hasn't done that after 18 months, I have the right to cancel this contract and have him out that house?

Thanks,
Saeed

How is re-finance defined in the contract? What was the term of the contract?

See basically that clause makes no sense. To refinance something means that it was financed in the first place. Well the only thing that was financed was the contract. So what that clause means is that the buyer refinances the contract. And why would they do that?

As Chuck pointed out a contract for deed is used usually when the buyer cannot obtain financing to purchase the property. So they pay the seller a down payment (usually less then a mortgage lender would require) and they make payments for a set time at which point they have either paid for the property or they make a final balloon payment.

The advantage to the seller for doing this, is that since the buyer may not be able to arrange the financing, they usually default on the contract at which point you take back the home and resell it. Usually the buyer has paid more than market value, so the seller winds up selling the property multiple times, increasing their profit.

The disadvantage is the buyer may damage the property costing the seller to fix it before reselling it.

Now, if the buyer has not lived up to the terms of the contract, you can say the contract is over and make them vacate.

But you NEED to have an attorney review this contract.

[saeedf]

Well, the contract indicates for 30 years and re-finaninig wasn't an option, it was a MUST. But I guess I am stock with it and I have to forget about my equity till I pay off my existing note.
But my question was; under this contrcat, can I sell it to another bank or lender and get out of it?

Thanks again,
Saeed

[excon]

Hello saeedf:

YOU AREN'T LISTENING!

Without seeing the document, NOBODY here can tell you exactly what to do. That's why EVERYBODY is telling you to see an attorney. That IS what you need to do. It is the ONLY thing you need to do. THE ONLY THING.

But, you're not going to are you? And, you're going to get screwed, even more than you already have.

excon

[ScottGem]

I often wonder why people ask for advice on a site like this then ignore the advice they have gotten.

You are either ignoring us or not paying attention.

So the contract was for 30 years. That means, after 30 years, they will have paid you the purchase price of the house plus interest (hopefully). But the refinance still doesn't make sense. What was supposed to be refinanced? And we told you already that this doesn't affect your equity. You are still the OWNER of the property. Therefore you can take a loan against the equity or refinance your mortgage. The fact that you have a contract that requires a monthly payment should help YOU refinance.

As for selling the contract, you can't do that. You CAN sell the property along with the contract, but that contract makes it harder to sell the property.

You got yourself in this mess by not consulting an attorney, you will not get out of this mess until you do.