Process Questions for Private Contracts - Posted by Dennis Cox (WA)

Posted by Jim IL on June 18, 2001 at 20:08:34:

I’d call some other attorney’s for advice.
I do not know your local laws, so your attny could be right.
But, here I’ve done a few contract sales, and when we do, I do title work, and get title insurance when I feel the need, but the seller does not pay any excise tax or tax stamps when we sign the contract and take possession of the home, that comes when we close at the pay-off date.
As for her title insurance policy, take a look at it. How old is it?
What does it cover?
I’d also record something about this, but probably a “performance mortgage” or “memorandum of agreement” to cloud the title and protect my position.

Let us know what happens here, it’d be interesting to learn from.
Check out your state and local laws about contract sales and the taxes being due and when?

Good luck,
Jim IL

Process Questions for Private Contracts - Posted by Dennis Cox (WA)

Posted by Dennis Cox (WA) on June 18, 2001 at 13:06:33:

I am about to close on my first investment home. The seller is accepting a small down and is willing to carry a contract for deed on the remaining amount (for 18mos) that she owes to her bank. After 1yr of showing good rental records, I will walk to the bank and refinance.

My attorney tells me that the seller must pay excise taxes and title insurance (the latter may be negotiated for payment) at the time of closing. He also informs me that, though not necessary, the title insurance protects me from any unseen encumberances or leins on the property.

The seller says that she ought not have to pay excise tax until we actually buy the loan out after 1yr-18mos. She also states that she has title insurance and does’nt want to pay for it again (estimated at $500).

I am, of course, influenced by my attorney. However, I am wondering how I might negotiate this unexpected 11th hour hang up with the seller. She has been extremely flexable to this point. Though she is not a happy camper with this latest development in our process.

Does anyone have suggestions for how to deal with this? Is it in fact necessary that she pay these unexpected costs?