Usury laws - Posted by ken in sc
Posted by ken in sc on February 19, 2002 at 13:46:42:
Usury (higher than the law allows) interest is probably why you read not to ls/op back to the seller.
For example, if the seller is $5,000 behind on his payments, and you buy the house “subject to” by catching up these payments, and then sell back to him for a $10,000 higher price than you paid him - then you could be found in court to have charged him 200% interest ($10,000 on $5,000). In other words, the court would say that what you really did was not buy the house, but made him a loan of $5,000.
Now, where do you live and what are the laws. Here in SC, we do not have Usury laws and are free to do this if we like. But many states not only have laws, but case law that could be used against you. It is up to you as a businessman to determine what you can do where you live.
As far as this deal, it is too thin. If he does not pay you (as Robert pointed out, he has a history of that), then you now own a house with no equity and high payments. I’ll take a house with no equity and low payments, but not with high payments.