Posted by WayneMD on December 14, 2000 at 07:17:46:
Bill – What are the consequences of not having the buyer sign a quit claim deed to be held in escrow?
Contract for Deed-“In Whos Name?” - Posted by Darren(CO)
Posted by Darren(CO) on December 13, 2000 at 09:27:35:
I am getting ready to sell with a Contract for Deed.
I understand I will need to have the CFD recorded but what do I do with the existing Deed(which is in my name).
Do I leave it in my name and hold it until all payments are met.
Or do I transfer it to buyers name now and hold it until all payments are met?
Darren
Re: Contract for Deed-“In Whos Name?” - Posted by JohnBoy
Posted by JohnBoy on December 13, 2000 at 09:38:51:
When you sell on contract, title stays in the SELLERS name until the contract is paid in full. If you are the SELLER, then DO NOT record the contract. Only record it when you are the buyer.
You should also have the buyer sign over a “quit claim deed” to be held in escrow until the contract is paid in full. That way if the buyer was to default or skip town one day before the contract was paid off you can record the quit claim deed to have the buyers interest released from the property to prevent any problems with getting clear title to the property when you go to sell it to someone else.
Have the quit claim deed notarized. Do NOT notarize the contract for deed to prevent the buyer from being able to record it.
Re:Is Escrow neccesary??? - Posted by Darren (CO)
Posted by Darren (CO) on December 13, 2000 at 12:54:17:
If buyer agrees can seller hold the Quit Claim Deed instead of using an escrow service??
Property taxes also stay in sellers name, correct?
Sorry, for my ignorance. I’m new at this and the buyer wants to close as soon as possible!!
Re: How about Deed of Trust - Posted by Darren(CO)
Posted by Darren(CO) on December 13, 2000 at 10:05:57:
Do I still need a Deed of Trust when using a Contract for Deed"?
Should it be recorded and notarized?
Re: Contract for Deed-“In Whos Name?” - Posted by Darren(CO)
Posted by Darren(CO) on December 13, 2000 at 09:59:37:
Excellent answer, just what I was looking for.
HOw would the buyer feel comfortable in signing a Quit Claim Deed? I would think he would be afraid of an unscroupulous seller…or does having it in Escrow protect him?
Re:Is Escrow neccesary??? - Posted by JohnBoy
Posted by JohnBoy on December 13, 2000 at 13:32:12:
Sure, you can hold everything if you want. What ever you and the buyer agree to.
Yes, taxes stay in your name because you hold legal title until the contract is paid.
You would write up the contract and amortize the amount to be paid in installments over x number of years that you agree to at what ever interest rate agreed upon and make the entire balance due within x number of years. Usually 1 - 3 years is the most common where the buyer would then need to get a new loan to pay off the contract.
Take the annual estimated taxes and divide that by 12 months and the buyer should pay that amount in addition to his payments every month to guarantee that the taxes are going to get paid. You would escrow that money and pay the tax bill from that when it comes due each year.
In addition you have the buyer pay for the first years insurance on the property have you named as additional insured and the loss/payee so the insurance covers you and pays you directly if the house was to burn down. Then take the annual insurance cost and divide that by 12 and have the buyer pay that amount each month in addition to the payments and taxes. That way you always have the money to make sure the insurance is getting paid each year.
The taxes and the insurance would be escrowed every month until the bill comes due and then paid from the escrow account.
You can either handle the escrow yourself if the buyer doesn’t have a problem with it or let your attorney take care of it for you.
If you have never sold a property this way before then it would be wise to use an attorney on this one to insure you have a properly drawn up contract that protects you. Each state has different laws pertaining to contract for deeds and if you don’t understand the laws in your state pertaining to these then I would highly advise using an attorney to handle this. It shouldn’t cost more than around $300 and that would be cheap compared to what it could cost you later if you didn’t do something properly.
As far as closing ASAP goes, any attorney could take care of everything within a few days.
Re: How about Deed of Trust - Posted by JohnBoy
Posted by JohnBoy on December 13, 2000 at 10:13:41:
No, you give the buyer a deed once the contract is paid in full.
Having the buyer sign a quit claim deed is pretty standard and common when selling on contract. That’s why it’s usually held in escrow which is usually the SELLERS attorney that holds everything in an escrow account. If the buyer doesn’t like it, TO BAD! NEXT!!!
Remember, it’s YOUR house, YOU are the seller, YOU set the price and terms!
Re: Quit claim in escrow - Posted by BillW.
Posted by BillW. on December 13, 2000 at 13:22:25:
Darren, in answer to your question, Yes, having the quit claim held in escrow by the seller’s lawyer should comfort the buyer because the lawyer will have specific instructions as to the conditions under which he is to file this quit claim. If the lawyer does not follow the directions, he could be in big trouble. This should cure any questions the buyer might have regarding whether you might do this illegally. Nothing will happen unless the buyer defaults according to the terms of the agreement.
BilLW.