Owner Financed contract - Posted by Brian

Posted by Michael Morrongiello on March 05, 2000 at 21:37:08:

Here are just a few clauses or concessions you might strive to negotiate into your contract where there is seller financing involved. If you can only get a few or even none accepted then don’t worry. The terms you have with that seller financing are a winner by themselves.

  1. First right of refusal clause is to purrchase the seller carry back mortgage in the event the seller wishes to sell his owner carry back mortgage in the future.

  2. Substitution of collateral clause would alow you to subsitute other real estate collateral of equal or greater value to secure your mortgage with the seller

  3. An exculpatory clause - Limits your liabiliity to the property itself and not you personally or other assets

  4. Right to make yearly prepayments on the mortgage for a 10%-15% discount off the total yearly payment amount. Allows you to invest your funds into a high yield type investment- the debt you are paying on

  5. 120 Day default clause instead of standard 30 days

  6. Right to prepay the note without penalty

  7. Assumability rights or no due on sale clause - allows you to either have someone else take over your loan or to “wrap” the mortgage and provide financng to another buyer.

Hope these help…

Michael Morrongiello

Owner Financed contract - Posted by Brian

Posted by Brian on March 05, 2000 at 09:03:12:

Tommorow I will be going to my attorneys office to look over contracts. It’s on a single family home. I already negotiated purchase price of 100,000.00 with 12,000.00 down house is appraised at 120,000.00. The terms are 8% at 30 year rate with ballon in 10 years but may be paid off after 2 years. My question is are there any clauses that I should try to put in the contract. I heard of right of first refusal, But I am not exactly sure what that means.

Thanks for all the help in the past year.