Posted by Ed Garcia on October 31, 2000 at 09:12:59:
There is no comparison between the time it takes to get a renter out of the subject property and the time it takes a borrower to go Chapter 13 and then move it into a 7. If a borrower knew what they were doing, they could tie the property up for at least 18 months. The buyer didn’t sell it on a land contract. If you go back and re-read Mike’s post, the lender was going to buy the property and put Mike under Contract for deed.
John, I feel Mike either misunderstood the lender or the lender led Mike to believe it was going to be a Contract for deed when in actuality they meant a Contract of Sale.
The difference is a Contract of Sale spells out the terms of said sale and suffices for the time being to be the only documentation of the sale. It is generally used when a buyer is offering a small down payment and the seller does not plan to relinquish title to the property until the buyer has more equity in it. It is usually supplanted with a deed and note secured by a mortgage or deed of trust AFTER the purchaser has amassed sufficient equity in the property.
If I’m wrong, then you’re right, there would be no reason for the lender to put Mike under a contract for deed. However since they were doing it in the manner that has been described by Mike in his post, I think I’m right.
Could they be doing it as ploy to borrow against the property? Could be, but I doubt it.
I think their main concern would be to protect their self against a lengthy foreclosure.