Need help understanding this

4 Replies

(Posted this earlier in a different section but I think it's more appropriate here.)

Okay, here's my newbie question -

I plan to purchase vacant land from owners that are out of state and tax delinquent. Since these owners would not be local to me in most cases, I would use a mobile notary service to finalize the transaction.

For my purchase, I would use the contract available from US Legal, found here:

http://www.uslegalforms.com/us/US-00472B.htm

My question: is there a place where I can get a layman's explanation of what the meaning is for the various sections of that contract, and how they should "typically" be completed before I send it to the seller? It seems like the time might come when a seller asks me what some wording means, and I would like to know myself.

Thanks everyone!

I cannot view these without paying for them @Scott Johnson . I need to start off by saying welcome to Bp! You are in the right place, however, I would caution you wanting to purchase a piece of real estate without professional help. That said, you are wanting to purchase what is called an "Unimproved" Property. My suggestion first, is to use a title company. If they have not paid the taxes I would also make sure they have not taken out any liens against the parcel. You need to know that this parcel is owned free and clear and only doing a title search would tell you that.

Explaining a purchase agreement is actually not that difficult. Everything just needs to be spelled out. In your case, I would also have an actual survey done. Depending on your area this will run you around $500-$800. You do not want just a "stake survey" in my opinion. You really need to have this all mapped out so you know exactly what you are getting. My business partner and friend did this for one of his very first deals and it just so happened that the land was not surveyed correctly in the last sale and when the new survey was completed he actually owned a few extra acres. When those acres are thousands of dollars a piece this can really add up quick. The opposite could happen as well and you just want to be sure. 

To answer your question...I would personally pay a real estate agent to do a consultation with you to explain this to you.This might be a great learning experience for you, and well worth the investment. Message me as I am an agent in Indiana and might be able to guide you as much as I can being in another state.

Welcome @Scott Johnson !

Good advice above.

In addition, I would strongly advise against using any kind of pre-paid legal forms!

I've seen too many investors loose literally everything because of a $75 contract [one friend of mine actually went bankrupt and got divorced because of a inadequate contract].

I would suggest you contact a real estate friendly attorney [you can probably find here on BP] in the state the land is located in to prepare the contract or at the very least have a local realtor prepare it using a State approved purchase agreement.

Then you have the tax situation to deal with.  As @Stephen Barton mentioned above, a good title company should be able to help straighten all of this out and provide you with a warranty dead [DO NOT TAKE A QUITE CLAIM DEED in lieu of insured deed]

I hope this helps and good luck.

Hi Scott,

I would recommend just going into a local title company and asking an Escrow Officer to explain it to you. If you haven't picked a title company already just be honest with them and say you are new and are purchasing a piece of property. Title companies get "show boaters" all the time (I used to work for them for 5 years) and the ones they love helping are the ones who are "new". That is what I would do personally, just walk into any Title company near your house and say "I have a contract that I need help understanding, do you have an escrow officer that can spend a couple of minutes with me?" Keep in mind today is end of the month and they will probably be super duper slammed busy. I would recommend going tomorrow or Thursday.

-John  

All good advice, thanks very much.

I probably will go through a title company for the first deal or two, but the deals I will be doing are usually going to be for a purchase price of less than $500. With a deal that small, there's not a lot of room to pay for a title company, title insurance, etc. I would like to learn how to do my own title search at some point.

I know I'll make some mistakes, but it's better to move forward imperfectly rather than wait until I know everything before taking action.

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