As mentioned in another post . Would any one be able to tell me where this came from? Realators have told me that this is practice. Ive talked to two different bankers and they say NOT. The banks in my case must possess the lot for their security . They think the idea is absurd. Was this another rumor lie started way back then by realators ? I would appreciate any concrete evidence .
Tim Mooney
Replies
Tim,
This is a practice that is more common in your neck of the woods. Commonly called a land contract sale instead of a deeded sale. The seller, often a developer and land speculator (like the Whitewater owners) allows you to 'purchase' the land with little or no money down but he retains the deed in his name until the last payment is made. Normally you would have the deed made into your name at the time of sale and her files a lein at the courthouse until the mortgage loan is satisfied. If you fall behind in payments with a normal deed and mortgage, it takes him three to six months to be able to reposess. With the land contract there may be a clause allowing him to take possesion again immediately, sometimes easier than evicting renters. Some horror stories about these are the folks who make payments for nine years out of a ten year contract, make improvements to the property, and break a leg and fall behind in payments during the final year, only to lose everything they have.
The banks have good reason to be wary of them. They want a first mortgage covering the whole shebang and are often willing to refinance in scenarios like I mentioned.
You have a good memory to remember where white water was and what it was about. At any rate what you said is the banks hold up. They want a deed in their file to own the whole shebang as you mentioned. I bought two houses and five lots from a man that got himself in trouble the same way. My bank and I paid it off in full to keep him from losing it all. He had put a lot of money in it also, plus labor. He had no way of going any farther with out his own money, he was broke . I never understood why he got into that venture.
Tim Mooney
you know how you can tell if a realtor is lying? his (her) lips are moving.
seriously, most agents are not experts in any field. when you find one that steers you straight, keep him around.
Tim -
This was what I did on my spec house, and it's pretty common around here. I know for certain that it's been done on 4 houses in that same subdivision - Maybe more.
The agreement I signed actually transferred the deed over to my name with the deposit. The bank said I had to do it that way, as the lot was part of the collateral for the loan.
I put $2,000 down, and had to pay the balance of $16,000 in one year, or whenever the house sold. But they let me slide on it way, way past the one year mark.
You can't have everything. Where would you put it?