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Answers (4)
Best Answer
- Andre-Paul Maddox, "Mortgage Store USA"
- Contributions:49
Land Contracts are considered an "Agreement for Sale" in which you do not receive title to the property, but the contract is recorded, solidifying the "Equitable Interest" in the property. If the you are negotiating a Seller Carry with a First Deed of Trust, you are simply doing a Mortgage Loan which is handled through Loan Servicing by a Escrow/Title Company or a RE Broker. Seller is Beneficiary, Buyer is Trustor and Loan Servicesor is the Trustee.
- Daniel Reynolds, "Broker Executives"
- Contributions:355
Thank you for all the emails on my seller carryback video. I appreciate the feedback on the topic.
- ConnieK_Oklahoma
- Contributions:2899
There is an "equitable title" for the buyer but the actual transfer of title doesn't occur on the Land contract until the last payment is made. The Seller Carry is an actual exchange up front with a mortgage so the seller has become a bank rather than a property owner.
A Risk that is higher with the land contract is that there is no urgency to perform the research or obtain an attorney's opinion on the title or even purchase title insurance until time to transfer- which is after final payment is made. What if there is a title problem discovered?? You have the same risk on seller carry of course because no one MADE you get title insurance they way a bank would require it but a title transfer did occur and there is an assumption that a some research on the title was done (unless it was just two people trading documents and filing themsevles)- it certainly would be reccommended either way to do a search on the title and get title insurance or at the very least an attorney's opinion. In addition if you are in an abstracting state and didn't get that document from the seller and you go to sell it later, you might have a higher expense having it rebuilt. Not many abstracting states left--but it is an issue that can fall through cracks easier on land contract (if it applies in your state).
A Risk that is higher with the land contract is that there is no urgency to perform the research or obtain an attorney's opinion on the title or even purchase title insurance until time to transfer- which is after final payment is made. What if there is a title problem discovered?? You have the same risk on seller carry of course because no one MADE you get title insurance they way a bank would require it but a title transfer did occur and there is an assumption that a some research on the title was done (unless it was just two people trading documents and filing themsevles)- it certainly would be reccommended either way to do a search on the title and get title insurance or at the very least an attorney's opinion. In addition if you are in an abstracting state and didn't get that document from the seller and you go to sell it later, you might have a higher expense having it rebuilt. Not many abstracting states left--but it is an issue that can fall through cracks easier on land contract (if it applies in your state).
- Susan Darby, "Susan Darby"
- Contributions:58
A Land Contract may also be known as a Contract for Deed. A contract containing all of the terms is typically prepared by an attorney. A memorandum or sale or the contract is recorded and to protect all parties it is wise to have a third party hold documents and collect payments. Title companies will provide this service. They usually hold a Deed to be given to the buyer upon completion of all requirements in the contract and would also hold a Quit Claim Deed from the buyer back to the seller that is delivered to the seller in the event of default. Upon default the seller can record the Quit Claim Deed and have full title to the property restored. It cancels out the Memorandum of Sale. If the seller does a First Deed of Trust they will deed the property to the buyer and then collect the payments the same as a bank would. In the event of default they would need to do a Trustee Sale just as any other lender would.
What is the difference between a Land Contract and a Seller Carry with a First Deed of Trust?
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- 5.0/5.0
- (16 reviews)
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