Posted by Dee-Texas on March 11, 2003 at 08:04:53:
Questions about a contract. - Posted by Dee-Texas
Posted by Dee-Texas on March 10, 2003 at 20:51:09:
Hello All,
I’ve got a seller willing to carry the paper on a really nice house!!! YEAH!!
I want to go with a contract to tie up the property. I have this purchase agreement that has this about seller financing.
Can anyone tell me what goes in the blanks and why?
Thanks…
4. Seller Financing. Buyer shall execute a __________________in the amount of $. As security for performance of the ________________________________________, buyer shall provide the following collateral:
In the event that said security is a mortgage encumbering the property, said mortgage or deed of trust shall not contain any “due on sale” or similar restriction. Seller agrees and understands that the mortgage securing said loan will be and remain subordinate to a first mortgage in the amount of $ _______________. Seller agrees to execute a continuing subordinate agreement for this purpose at closing of title. This clause shall survive closing of title.
??
Thanks for the help,
Dee-Texas
Re: Questions about a contract. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 10, 2003 at 21:37:07:
Dee–(TX)-------------
First blank: “Note” or “promissory note.” This is your promise to repay the lender. It might be written as it is to put in things like five-year note, interest-only note, straight note, or other variations on the types of notes that could be written.
Second blank: amount of loan.
Third blank: “note.” I think. Again, it might be modified to include the major terms of the note.
Fourth blank: the property used for collateral. The house you are buying, some other property that you own, or a combination thereof.
The next blank is part of a sentence to make the carry-back a junior obligation–a “second loan.” If this is not the case, it should be ommitted. Jack Reed also says that vague “subordination” agreements like this will probably not be enforceable in a court of law. And this one is vague to the extreme. It looks pretty much worthless to me. If you use this language, please get it corrected by an attorney.
Survive closing. This is something to make sure that the terms of the sales agreement will be enforceable after the sale is completed. If you had a clean-break sale, where the former owner had no lingering connection to you, it would not be necessary, I think. Please remember I am not an attorney. You are not paying me for rendering legal advice. You should seek competent legal advise before agreeing to anything.
Good InvestingRon Starr******