I advocate treating a buyer honorably and doing the right thing. IF they pay you on an unrecorded land contract you make SURE you make the payments on the debt you have taken title “subject to”. Doing business ethically keeps everyone HAPPY.
However be aware that IF yoiu choose to record a memorandum of interest or agreement that shows the world that this buyer now has an interest in the property you may find some flak from the lender over the due on sale clause IF they find out. There is a chance (may be great may be just a little chance) that that lender might investigate further the true title holder of the property and determine that a violation of the DOS clause has taken place.
In some instances like this it may make more sense to give them agreements, copies, etc. BUT to NOT record anything in the public records that could tirgger that DOS.
Everyone…thanks for your input and please read this… - Posted by WilliamGA
Posted by WilliamGA on February 09, 2000 at 17:24:37:
Just to clear things up…
I have every intention of doing the right thing by both my seller and my buyer.
This is the first “subject to” for me (strange, I got 2 of them in one week) AND the first time to sell with an unrecorded land contract. I am doing this all the way by Bronchick’s courses and docs. I had the house deeded to a land trust with the owner assigning me his benificial interest. I recorded the deed to the land trust. The trust agreement and assignment of interest are filed away in my file cabinet.
I am selling on an unrecorded land contract. I do not want to record it, my questions are simply should I or should I not do it. The questions are not motivated by any desire to do anything underhanded or by my buyer’s problem with doing the deal that way. Frankly, he doesn’t care. All he knows is that his wife wants the house and he wants to buy it for her. He understands that the deed will stay in my name until he pays it out or refi’s.
With that said all I am looking for is advice on whether this is the best way to proceed with this sale and minimize the problems that could crop up later.
In other words, have you guys done it this way and did it work? If it didn’t work out so well, what were the problems?
Why do you want to record it? Dont know your laws of your state but that could lead to a real process of foreclosure and an argument over the interest in the property. Not to mention what Michael says below.
Re: Unrecorded Land Contracts - Posted by Steve-Atl
Posted by Steve-Atl on February 09, 2000 at 12:56:53:
William
I agree with Ernie M. I record a Notice of Agreement for Deed. It states that a agreement for deed exists, but it goes on to state how I can extinguish the buyers interest if he does’nt pay. Pretty neat…it lets the buyer know you intend to do what you say, yet it also publicly records a process to protect you if he does’nt do what he says.
Record the Thing and avoid the grief! - Posted by Ernie M
Posted by Ernie M on February 09, 2000 at 12:30:02:
Nothing wrong with it , however it will not offer your buyer any protection! Is he ok with that? or is he unaware of how a Land Contract really works and that he should have it recorded? Be an upfront and down to earth investor and have him have it record it. If you are an honest investor type you will want to do this. Saves a lot of possible grief in the future for both parties. Put yourself on the other end…Would you want it recorded?..You sure would!