When Doing A Sub-to, After Signing CFD With T/b Do You Record The Land Contract?
For possible evictions, do we also have the t/b sign a rental agreement just in case they default and that way they can be evicted.
Thanks for the help guys and gals
Quinn
no, you record nothing. they sign a standard purchase and sales agreement or sell offer and acceptance agreement if your using John's materials, and they also sign the CFD and a promissory note. so if they default you can kick them out because of the promissory note. they record the deed when the refinance.
You record nothing, but your buiyer probably will record the CFD.
The state laws regarding CFD's dictate whether you can 'kick someone out' or not. In somes states you have to foreclose. Others it depends on the length of the contract and the equity level.
Check your state laws before trying to evict. You may not have that right. Then again, you may.
How can they record the CFD if they don't have it? I thought they weren't supposed to get the deed until the contract was fulfilled. Now I'm a tad bit confused.
Quinn
you are right quinn. They get the deed when everything in the contract for deed is fulfilled. I don't know how they would record it being that you would be giving them a copy of the contract.
Nothing is recorded until they are ready to refi...that is when they get the deed. until then, the deed that you recorded is what shows on public record
The CFD is recorded usually by the buyer. I assume that they are getting a copy of the contract that you are having them sign.
They do have an legal equitable interest in the property and have a right to protect that interest by recording the CFD.
okay..........record it
I wouldn't record it for the buyer. That is the buyers responsibility.
Just don't be surprised when you find out that your buyer has recorded the contract. Some do, some don't.
Buyer could record IF he has notary public acknowledgement on his copy of the CFD...if he doesn't have that, then no state would allow it to be recorded.
However the Buyer might record an Affidavit of Contract, or Memo, or something else to show his contractual interest in the RE.
This is one of the main arguments for the use of the trust, as per Fed law, and his deeding his RE into that trust, which deed is certainly recorded, and notice is given to the bank of that deed.
By using a trust like this, no effort is then made to keep anything secret or concealed, as there's no need to do so.
I guess their was no consensus on topic?
Like thomasgsweat said, some states will treat it as a foreclosure when you try to get your t/b out for non payment.
"In my opinion"
just an opinion ~ you could have them sign a rental agreement as well but don't refer one to the other when you prepare the agreements. Leave them as separate instruments.
Hoped that helped~
Aren't you guys confusing a lease option agreement (between a landlord-seller and a tenant-buyer) with a contract for deed (between a seller and a buyer)?
In a contract for deed, there is no tenant buyer, no rent agreement, and no eviction process. A contract for deed is an installment sale.
Your local state law will dictate the process under which you may foreclose and regain possession of the property.
quinn,
A Land Contract - Contract for Deed is an installment contract in which the Seller finances the purchase. Seller maintains Deed until satisfaction.
Comparable to owner financing. Buyer gives Seller a down payment and the Seller acts as a Bank; financing the balance of the purchase or sale price.
I have never had to do a Judicial Foreclosure to get a buyer out of a property even though it is required in some states. The delinquent buyer has always left with a feeling he was better off leaving the property and moving on with his life.
Here again you must learn the methods of evicting a buyer without foreclosing, you must start thinking creatively rather than conventionally.
John $Cash$ Locke
Land contract, Contract for deed, Agreement for bond, Conditional sales contract, etc,etc, they're all installment contracts where the owner acts as the bank. To record or not to record???. That is the question.
If the contract was acknowledged, it can be recorded. The seller wouldn't want it recorded to keep the lender from exercising the "due on sale" clause. (rarely happens). The buyer would want it recorded to give "constructive notice" of her interest in the property and establish her priorty position.
If the contract is not acknowledged than the interested party can still record a "Memorandum/affidavit of contract" to put the world on notice.
A seller should (belt and suspenders technique) prohibit the recordation any such documents- and have a stiff monetary penalty for the perpetrator of any such act)
Sellers should beware of recording a land contract because if the buyer decides not to purchase the home they have the legal right to get all the funds they paid out to purchase the property. If the seller wants to record the land contract, they should set up an escrow account and all money should be deposited into that account until the deed is transferred to the buyer.
I suggest that before preparing or signing any seller financing documents that you consider legal advice from a reputable real estate attorney. It can save you a lot of money in the long run.
Quote:
On 2003-11-20 15:03, Ready2Invest wrote:
Sellers should beware of recording a land contract because if the buyer decides not to purchase the home they have the legal right to get all the funds they paid out to purchase the property. If the seller wants to record the land contract, they should set up an escrow account and all money should be deposited into that account until the deed is transferred to the buyer.
I suggest that before preparing or signing any seller financing documents that you consider legal advice from a reputable real estate attorney. It can save you a lot of money in the long run.
Ready2invest,
This statement isn't entirely true. I encourage everyone to look at their state specific laws.
I do agree that local competent legal advice should be sought after.[ Edited by thomasgsweat on Date 11/21/2003 ]
Ready2Invest .....What???
What do you mean "if the buyer decides not to buy"? They've *already* decided *and* committed to buying; that's what a land contract is. It's a contract committing both the seller and buyer to certain terms.
If the buyer walks away...that's it. They're forfeiting their downpayment as well as any principal portion of P&I payments.
Tell me if I'm way off base here?
Once again it depends on the state laws.
They may be entitled to an amount over a certain percentage of the paydown. Or something totally different, or nothing.
Read your state laws and talk to an attorney.
Very tough recent laws in TX re CFD/REC,so if it's being done there, please have a lawyer do your docs...unless you think you'd enjoy looking OUT from behind bars, and/or paying lots of damages to your buyers.
Sammy
Educate me - how can the seller keep the buyer from recording the contract?
Jay
Jay,
Easiest way to prevent your buyer from recording anything is....mark ANY copies of documents you give them with a big stamp that states "COPY". Only original doc can be recorded and sometimes people get away with recording copies because they're so clear. I work for a Title Co. I've seen it time and time again. Hope this helps
In Sub To deals I have the T/B sign an option to buy the real estate and a lease agreement. It appears to be much easier to evict and to recover funds if there is a lease agreement signed but like Locke said most the time the person knows its time to move on and they are such a deadbeat and recovering any funds may not be worth your time.