Tenancy in common means that the property is owned by 2 or more persons, each of which holds an undivided interest. By the way, the interests do not necessarily need to be equal. Also, there is no right of survivorship with tenancy in common.
Brett, it would be helpful if we knew what state you’re in since real property laws vary from state to state. As an example, not every state recognizes tenancy in common.
Based on your prior posts, I would definitely suggest that you seek competent advice from someone who is committed to protecting your best interests.
I am really nervous here. The story is, I have someone that is helping with the sale of my house. However the buyer has known him longer than he has known me, so I think he is working in the buyers favor.
The Deal
Selling our home under contract (Meaning, I will put him on title with me for 6 months, at the end of 6 months, he refinances and cuts me out, I hope that is what under contract means, if not, someone please tell me) for 6 months at $155,000, with $5000 down, and $1100 mo payment. We owe $144,000 and $974 mo payment. Move in date is May 1st. My questions are;
How should I structure the monthly payment? Does he pay $5000 down, and $1100 on May 1st or does he pay $5000 down and $1100 June 1st having lived in the home since May 1st?
Does this sound like a shaky deal?
Is there anything I must watch out for?
Is having this debt on my credit report going to really mess me up for buying anything in the future? I am also self-employed (web developer).
Ok, so those are a lot of questions… Please, I need some major help here.
Thanks!
Brett
Mikes comments are on the money for one issue but there is a FAR MORE IMPORTANT ONE that you need to look at.
ONE:
When you put this person on title they have EQUAL ownership of the property and can take out a loan without your knowing it.
TWO:
At this point you have nothing that says they can QUALIFY for loan to pay you off. Have you looked at their credit or received ANYTHING that says they can get a loan?
THREE:
Most lenders require 12 months ownership before they will provide a loan based on appraised value. There are a FEW that will do a loan with 6 months time of ownership. If he is buying from you his address will be the key that says he has lived there for 6 months unless he does not tell the truth on the application but a verification of mortgage with yoru lender will confirm this.
ADDITIONALLY
If you sell to him under a contract for deed or land contract you DO NOT have to place him on title, that is the purpose of theses deals. Teh say in essence "I’m sellign to you but I’m not givign you title UNTIL you pay me off. You can record the land contract but he does not have to be placed on title.
If you gutt tells you not to trust someone in the deal FOLLOW IT, it is likely RIGHT!!
As far as the money goes reqiire that he make the largest down payment possible with monthly payments in a contract for deed or LEASE PURCHASE with the clause that the $$ is forfited if he does not get a loan.
LASTLY
YOU NEED A “REAL ESTATE” ATTORNEY or an experienced investor to protect YOUR INTERESTS. Just as there are a lot of simply things that you write into computer code to build a web site, there are A LOT of little greek sounding clauses that can be written into a contract that may mean nothing to you but will cause you a lot of problems.
I am a mortgage banker and investor. If I can help, contact me.
He aint going on the title! "DID YOU HEAR ME? He is NOT going to be put on the title!
You will need to sell to him on an agreement for deed. Yes, collect his $5000 down (although you should get more for a house worth $155000) I’d be looking for about $10000 minimum. Let him make payments to you for the $1100 per month as agreed upon and when he gets his new loan and you get the rest then you deliver the deed to him (Not any sooner). Also set the terms of the agreement whereas he has a specific time frame to get this deal closed.
If he has been in the house for the whole month prior, he pays the rent for that month as well.
Please DO NOT place this guy on the deed with you or you’ll be in for a possible big nightmare.
Why don’t you try contract for deed sometimes called a land contract? I think this is what you are trying to explain. With a L/C there are two deeds. The first is yours and the second is going to be the buyers. But this second deed is held in escrow so in case of default you keep the house.
The way you explain it I can’t see any risk to the buyer. If he is already on your deed and he doesn’t pay, then he won’t lose the house. If you work the L/C get the $5000 and $1100 on 1 May.
Stay away from joint tenency. If he really is going to be on the deed with you, make him a tenent in common with about 1% interest.
Thanks! These are the kind of suggestions I need. Would you explain how (I am a newbie… obviously) how and agreement for deed works. Thanks, I appreciate it. You probably just saved me some major headaches.
Thanks
Brett
Thanks for the reply, would you explain tenent in common? Also, I failed to mention that I would write in the contract that they payment is due on the first, its late on the 4th and I cut him off on the 10th. Do you think that would hold up? Also, how fast could I get him out if he defaults?
Thanks for your help!
Visit http://www.legalwiz.com and click on “Legal Forms” for examples of Contract for Deed or Agreement for Deed.
I would get a Real Estate Attorney involved being your new to this just to protect yourself and to make certain the agreements your using are legal in your county and state.