How An Owner Financed Land Contract Can Help You To Purchase Your Next Propertyby Owner Financed Land The Owner Terms Land Network
Owner financing land is one of the most popular ways to purchase your next land or property. A land contract is a type of owner financing that allows the buyer to make payments to the seller for a home or land purchase. The buyer gets to use the property but the seller hangs onto official title until paid in full.
Over the last couple of years, the demand of purchasing lands or properties by using owner financing contract has increased a lot than never before. It is true that, the contract comes under several names including Real Estate Contract, Contract for Deed, Installment sale and many more. This is a good alternative way to document the seller financing arrangement from the more common note and mortgage or note and deed of trust.
The Requirements of Using Owner Financing Contract:
The buyer should be careful while purchasing the land or property using owner financing contract. One big consideration with a land contract is that the buyer will not receive the warranty deed to the property until the purchase price is paid in full. It means the seller stays in control as official title holder while the buyer makes the payment.
Basically, with a deed of trust or mortgage the seller provides a deed to the buyer at closing, transferring title to the buyer. Then the buyer simultaneously gives back a purchase money mortgage to the seller for the portion owner financing land. When the specific amount financed is paid in full the lien is simply satisfied.
When the seller holds fee simple title using a real estate contract the buyer is holding equitable title. Since the buyer does not yet have the deed it is almost impossible for the buyer to obtain any type of secondary financing unless the contract is paid off.
Apart from that the buyer also risks the seller encumbering or clouding title before the contract is paid and the deed released. To provide greater protection the warranty deed can be held in trust by a third party escrow servicing agent.
Moreover, the contract of owner financed land oregon can be unrecorded or recorded at the country level depending on local practices. A seller can be also sell contract payments for the cash. In that case, you need to know that some investors may require conversion to a note and mortgage or a note and deed of trust.
Created on Jul 19th 2018 07:22. Viewed 313 times.