Land Sale Contracts?

When selling a property, let's say with owner financing. Do I have to state that there is a lien against the property? Can I stipulate in the contract that once the payments are complete, and I use the payments to pay off the lien, I will then transfer title?

Perhaps someone can recommend a good attorney for me to get my forms together and in order.

Edited: 06/26/2010 at 11:11AM

Dustin Lyle

Real Estate Investor · Kentucky

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Jan 11 '10, 12:34 AM

Well... What you have to worry about is the lien holder... Is it a bank? If they have an owner occupied loan on the property, and find out you have "sold" the property, they might call the loan.. On another note, as a selling point and a way to keep yourself safe from the purchaser, Why dont you sell it via Lease Option or NNN lease option? This way, you havent actually "sold" it until they decide to exercise their option sometime down the road. With the Triple net, they would be responsible for the taxes, maintenence, insurance (with you as the benificiary) utilities etc. Some proceeds of the down-payment you get initially, can go towards a NNN performance policy if the tenants' credit qualifies. This will insure that the lease will "perform" as stipulated in the contract. The NNN allows you to utilize the equity/lien in the property, while sheltering yourself from taxes, until they decide to purchase.... Which is when you do an exchange for "like kind" property, and do another NNN... Never paying a dime in taxes! :)

Edited: 06/26/2010 at 11:11AM by Dustin Lyle

Jose Cabanero

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Jan 11 '10, 12:39 AM

Thanks for your reply Dustin,

The lien will most likely be a mechanic's lien of some sort. I'm not 100% sure, but that's what my due diligence is telling me.

As for other selling strategies, I'm pretty sure I'm going to end up doing some sort of owner financing. What I'm not sure about is how to collect payments, while still holding title. I guess, for clarity's sake, here's what I thought I was going to do:

1) Secure a contract from a buyer with my financing. I do not transfer title until all payments are confirmed.
2) Once all payments are cleared, pay off any lien against the property that I agreed to pay off in step 1.
3) Transfer title to the new owner.

I'm obviously concerned about the buyer defaulting on their loan, and I suspect it's a lot easier to hold the title until all payments are current than to foreclose on the property.

Maybe there's something missing? I'm certain I overlooked something.

[EDIT]

I should probably state that this property is raw land, and thus, I don't think I'll have to worry about any tenants living on the land. I'm more worried about an overconfident developer.

Edited: 06/26/2010 at 11:11AM by Jose Cabanero

Dustin Lyle

Real Estate Investor · Kentucky

123 posts
2 awards
50 influence

Jan 11 '10, 01:02 AM

Before you close at the closing company or attorney's office, they will do the title search and clear the title, if there is a lien, thats when it will be taken care of (unless you take care of it prior). If you want to be sure about the payments, use an escrow service, at the expense of the buyer.

If you use the lease w/option to purchase method, there will be no need to foreclose if something should come up.. Considering the purchaser doesnt own the property until they exercise their option.
If you wanted to actually "sell" the property and carry the note, You could use an attorney or escrow service for this as well... This might be the only viable option if the purchaser is going to obtain mezzanine or bridge financing to develop the land. Either way, you won't have to worry about "confirming" the payments as it will be taken care of for you.

Edited: 06/26/2010 at 11:11AM