Contract of Sale ? for the pros here - Posted by Dannyp

Posted by Bill Gatten on February 14, 2000 at 20:37:38:

The Contract of Sale:

Due-on-Sale violation in underlying financing (but who cares, if your payments are always exactly on time, and the lender never finds out…or cares one way or the other?)

Seller’s liens, suits, judgments, tax problems, marital problems and creditor problems can (and will) cloud the title to “your” property (and even cost you the property and all you have in it if it gets foreclosed upon by the seller’s judgment creditors, the IRS or a bankruptcy or divorce court: and they jist ain’t nothin’ you can do about it).

Your property could be tied up for years in the seller’s Probate proceedings, should he die of anything serious.

If you’re making payments to the seller…he could default in your payments for a period sufficient to cause you significant financial harm (to cure a prolonged default)…

If you’re making payments to the bank, you could default in “his” payments long enough to create a stiff financial imposition for the seller.

The PACTrust™ Ahhhhh.

A better (scratch that…) A 'nother way: Use a PACTrust conveyance instead. Same advantages and benefits without the negatives. Put the property in a land trust and set up exactly the same contingencies and parameters you would have under the contract of sale. Avoids DOS enablement; avoids title conflict; avoids the potential for judgement attachment by credit and tax liens, BKs, marital disputes, and the like. Doing it this way also effectively shields the property from the prying eyes of judgement creditors, the IRS, your neighbors, etc. while avoiding the potential for probate DEFUGALTIES (ie., should you have fewer fugalties than one might choose, the PACTrust will effectively serve to refugalitate them with reasonable ease).

Bill Gatten

Contract of Sale ? for the pros here - Posted by Dannyp

Posted by Dannyp on February 13, 2000 at 23:30:30:

I am interested in buying and selling using a Contract of Sale.
Basically I would get a contract with a seller to close in 90 days or sooner. That way I would have time to find a buyer. example Seller wants say 4,000 down 100,000 sales price.and say they have a monthly payment of 850. my contract with seller is all due and payable in 5 years.
Now I find a buyer with 6 or 7,000 down sales price of 108,000 make a new note and it would be due and payable in 5 years. I would be making money on the down and monthly payments. What are the possible problems if any? Any other useful info would be great. Any thoughts good or bad do tell.
Thanks Danny

Re: Contract of Sale ? for the pros here - Posted by JohnWe (NoCA)

Posted by JohnWe (NoCA) on February 14, 2000 at 20:52:25:

You’ve got the basic idea.

First of all, I wouldn’t buy on a land contract unless I had to. Just get the deed! If you do, make sure you record your contract.

I would definitely sell on a land contract, but do whatever you can to discourage your buyer from recording his contract. If he’s sophisticated enough to record his contract, try to get a deed in escrow, or something to protect your title if the buyer decides to skip town with a cloud on your title.

Finally, as Bill suggested, it’s probably best to do this through a land trust of some sort.

If you’re serious about this strategy, I would suggest picking up Bill Bronchick’s Cash Cow course.

Hope this helps.