Posted by Nate(DC) on January 03, 2002 at 15:58:49:
I think your friend (the buyer) might want to contact a real estate attorney to see if he needs to take some action to protect his rights. Particularly with the new CFD laws in Texas which are very buyer-oriented, he may find that he can intervene in order to protect his rights under the CFD.
NHT
CFD sale: then seller refinances? - Posted by Chip (Tx)
Posted by Chip (Tx) on January 03, 2002 at 14:10:16:
A friend bought a house several years ago on Contract for Deed, and now has been notified that the seller is refinancing the home. The CFD will be paid off in 9 years, so the seller refinancing at this point doesn’t look too good to me, as they must deliver free and clear title to the buyer at that time.
I looked at their contract, and it is silent on this point. I feel the CFD should have prohibited the seller from refinancing.
Any ideas or comments?
Thanks to all who replied! (nt) - Posted by Chip (Tx)
Posted by Chip (Tx) on January 07, 2002 at 19:28:12:
nt
Re: CFD sale: then seller refinances? - Posted by JohnBoy
Posted by JohnBoy on January 03, 2002 at 15:11:18:
As long as the amount that the seller is refinancing for doesn’t exceed the amount the buyer owes to pay off the contract then there shouldn’t be a problem. If the seller is trying to refinance for more than that amount then that is a big no no!
You said the buyer has been notified the seller is refinancing? By whom? I’m assuming the lender which would mean the buyer must have recorded their contract. If that’s the case then the lender will require the buyer to sign off by subordinating their position so their new loan would become in first position over the contract recorded. Otherwise the lender would be in second position to the contract. Unless the contract stipulates that the buyer agrees to subordinate to a new loan in the amount equal to the balance owed or less, the buyer doesn’t have to sign off on anything. That would force the lender to accept being in second position behind the contract, which would be unlikely that they would do it!
Has the buyer’s contract been recorded?
Did they get a deed signed off by the seller deeding the property to the buyer that is being held in escrow to insure getting title when the contract is paid in full?
Re: CFD sale: then seller refinances? - Posted by Chip (Tx)
Posted by Chip (Tx) on January 03, 2002 at 15:48:27:
The buyer found out about the refi when a survey was made for the lender. The survey guys knocked on their door, and wanted permission to work outside.
The CFD has not been recorded by either party, and the contract prohibits recording. I don’t think there is a deed in escrow.
I suspect the seller’s new loan might be in excess of the buyer’s balance, due to equity build up. That would not be good.