Posted by David Alexander on June 06, 1999 at 22:45:48:
Yes but once the Deed is conveyed it is no longer a Contract for Deed. You can agree on anything, my observation of PBoones post was simply that he said When you do a contract for deed, the deed is transferred, which is not true. That is why it is called a " Contract For the Deed". The reason why this is relevant is because in most instances when the Deed is transferred the rules for foreclosure are different.
David Alexander
Contract for Deed - Posted by Maurice (Ca)
Posted by Maurice (Ca) on June 04, 1999 at 11:10:14:
Hi All:
I put this post down already under “Lease option or warranty deed”, but I think I posted late & no one saw it. So here’s my question again:
I know it’s been touched on before on this board, but for some reason I just cannot get contract for deed through my clouded brain…I mean I understand l/o pretty well & wholesaling, but deed for contract continues to puzzle me. So maybe if some of you would do this hypothetical situation, it might help some of us.
Scenario:
You are talking to an anxious seller who advertised in the paper: “must sell now. flexible, will consider l/o. asking $100,000”.
You find out that he’s already been transferred to a job in another state & has listed the property for 6 months unsuccessfully & owes $95,000. Fair market is right around $100,000. He’s not behind & he already has another house that he’ll have to start paying a mortgage on soon. His p.i.t.i. is let’s say $800 monthly (remember this is hypothetical) & the fair rent for this property would support up to $950. He’s asking $5,000 down is very open to l/o; so how would you bring up contract for deed: the benefits to the SELLER & why he should do this.
Also, if this seller is willing to do this, how do you write it up? Is there closing? etc. I know, everyone’s gonna say: get a course. And trust me, I will be slowly building up on my library. But with the 2 courses I do have, none goes into detail on how to set it up.
I’m sure other newbies out there wonder this: especially with Legrand saying “go for the deed first”…so now, we just want to know the tactics.
Thanks!!
Re: Contract for Deed - Posted by JPiper
Posted by JPiper on June 04, 1999 at 13:04:01:
There seems to be a little confusion here.
“Getting the deed” is NOT something that is accomplished by doing a “contract for deed”, land contract, etc. A contract for deed is a form of sale whereby upon the successful completion of the contract the seller gives you a deed. You DON’T get the deed upfront.
Perhaps what you’re thinking of is a subject to assumption using a trust. A purchase constructed along these lines would result in your “getting the deed”.
If you really want to focus on the advantages to the seller?.your getting the deed is probably the least advantageous way for HIM to sell the property, unless you’re getting a loan to pay him off, or paying cash. Otherwise, he gives you the deed, but HIS name stays on the loan?in other words, he’s still liable. I would say that the most advantages may accrue to the seller with a lease/option?.but again it depends on how things are structured and the situation of the seller in terms of things like taxes. Right now I prefer selling with a lease/option over a contract for deed for tax reasons…and possible liability issues.
From your perspective as a buyer, getting a deed has advantages?.but it carries a few disadvantages too in terms of liability perhaps. As far as a lease/option or contract for deed from your perspective, again it depends on how each is structured. But chances are when everything is weighed out, you can make a better deal for yourself with a lease/option than a contract for deed?.just my opinion.
JPiper
Re: Contract for Deed - Posted by PBoone
Posted by PBoone on June 04, 1999 at 12:04:24:
Look @ www.legalwiz.com Mr Bronchick covered “Wraparounds”.
the difference in your senario
L/O gives you first right to purchase property but also gives you the right to walk away anytime.
Contract for deed you put 5k down the seller plays the bank in turn you get a deed for the property seller gets a note w/ promise to pay.
Pat
Now that makes sense! - Posted by Maurice (Ca.)
Posted by Maurice (Ca.) on June 04, 1999 at 14:06:32:
This is why this site is so wonderful…that makes sense to me. I constantly hear “go for the deed”, and now I understand the context.
Thank you JPiper & PBoone.
actually… - Posted by David Alexander
Posted by David Alexander on June 05, 1999 at 15:31:42:
Actually, on a contract for deed, you do not get the deed until the contract is paid in full.
Like a Car Title.
David Alexander
Some additional input… - Posted by Jim Kennedy
Posted by Jim Kennedy on June 05, 1999 at 21:50:49:
David,
You’re right. A contract for deed can be constructed so that the buyer receives the deed only after the ENTIRE purchase price has been paid. However, a contract for deed can also be constructed so that the buyer receives the deed after a SPECIFIED PORTION of the purchase price has been paid.
Example: Seller owns a free & clear property worth $100K. Seller is willing to carry a 1st as long as buyer puts down 20%. Buyer only has $5K for down payment, so seller says, ?OK Mr. Buyer, I?ll accept your $5K now and let you take possession of the property. But I?ll retain title until you have paid your loan down to $80K, at which time I will give you a deed to the property.? They then draft a contract for deed spelling out the agreed upon terms and conditions.
I?m not trying to be overly nitpicky, just wanted to add my 2 cents.
Best of Success!!
Jim Kennedy,
Houston, TX