Owner Finance

14 Replies

Good Morning Biggerpockets,

I am about to seller finance my first land deal but I do not think I have a good seller finance contract. Can someone who does selling financing for land sale provide me a sample form they use to owner finance their deal? A link where a good template is located also works. Thanks for the help. 

LOL, now I see why so many attorneys leave a law practice and go to corporate work. 

Seems everyone thinks legal and financial matters are simple DIY steps.

There are all kinds of junk contracts on the internet, Texas along with other states get pretty picky about how to do land deals and financing, do it wrong and you can lose the farm, your money and get fined. 

Help feed an attorney's family, see one in your area today.  :)

I would also recommend seeking out a closing attorney, that does owner finance deals. 

If you are asking about "contract for deed" or "land sale installment" contracts, you really should reconsider.  It will cost the same and create less liability to go with a deed, note and deed of trust.  There are countless posts on the topic.

If you are asking about contracts to paper the agreement pending closing and you don't want to have original contracts drafted, you might consider TREC promulgated forms for simple transactions. They are widely accepted and current with Texas law.  It is likely that a sophisticated buyer is familiar with them and therefore you will spend less time negotiating the documents. See the TREC website for the forms.  Take note of the legal disclaimer in red type at the top of the page containing the contract PDFs.  For a simple transaction it is possible that all you need is a contract (form 9-12 for unimproved property) and seller financing addendum (form 26-7). As mentioned, there are all kinds of Junk DIY contracts on the internet. You will likely need counsel to assist you with the Deed, Note and Deed of Trust.  Close with a local fee attorney who can handle the closing and assist with preparing documents.  They may even assist you with the contract.

@Joseph B. Davisson I'm not negotiating the contract for the deed. The land is located in Florida. So it should be a straight forward seller finance deal. @John Brian  getting a closing attorney for land might be a bit of an over kill especially since we are not talking about a lot of money. Have you sold land DIY? @Bill Gulley I understand your concern about helping feed an attorney's family but there are so many bigger pockets with much more knowledge then me that could direct me to a good place where a Seller finance contract is located. Not only that but after they help me, who knows I might gain a business partner who I can include in many more deals to come. Also, instead of helping feed an attorney's family I'll be helping feed many bigger pockets business partner. The beauty of bigger pockets is that it is a community of knowledgable individuals willing to do what it takes to get a deal. Where is the spirit of DIY? I'm calling for those who know how to do it to offer their assistance. 

@Enrique Reyes

Sounds to me it's more about the money you'll need to spend. As Joseph mentioned, thinking your deal was in TX, his advice still applies, just go to the FL real estate commission and see what they have. If they don't have forms, then you're stuck basically. You need an attorney there in FL.

The thing about financing now as opposed to the  "Wild West" years is that we have new federal laws in place you need to comply with. Along with that you have FL state laws dealing with financing contracts. 

You might get a boilerplate promissory note and a standard deed of trust, that's not your issue, it's going to be unique because of your borrower. That specific borrower must be underwritten, that isn't in any boilerplate contract. No two borrowers are exactly alike, you need to take steps through underwriting each one to be compliant and avoid financial losses, like fines. 

It doesn't matter how big or small the deal is, legal compliance doesn't have a price range.

It's okay, I have to tell lots of people on BP what they don't want to hear. You're turning your real estate deal into a financing deal, finance is not real estate. 

Belly up to the bar and pay the piper, it costs money to make money in financing, if you aren't making that much then you may have the wrong buyer, sell it for cash if it's not a big deal. 

Which leads me to think too, having to finance a very small deal to a buyer probably means you have a weak buyer, not much money, that usually goes with lower income and credit issues. Then if that's the case, you can be dealing in predatory lending and dealing, the fines exceed the value of the property I'm sure. 

So, no, it's not a DIY thing for an inexperienced finance type and all that needs to be done can't be explained in any forum thread, not even a book, it would take a volume of books. The easy way? See an attorney. :)

I have sold land before, it has always been a cash deal.

I wish you good luck! 

Gentlemen, I wanted to thank you for your feedback. Since I am a DIY I don't have a low risk tolerance but I do appreciate your feedback. I prefer the productive feedback you gentlemen provided than no feedback at all. 

BTW @John Brian I would take your advice more seriously if you did use seller financing in your land deals but since you haven't I can see how you can promote lawyering up from the beginning. Once again I'm not asking for someone to make a land contract for me, I'm asking for a template so I can compare and contrast. The bigger pocket community is so big I figure that there should be someone out here who actually does seller finance and is willing to share their experience. My goal once I am successful is to help others become successful as well. I do appreciate the advice but I also welcome pointers in the direction I am requesting: for example a sample seller finance land contract.

@Brent Coombs no sarcasm was intended. I am sincerely grateful for the advice but I have no intention of following that advice. Please don't tell me I won't be successful because I won't follow their advice. I do not intend to offend but I am asking advice from individuals experience with Seller finance specifically for land. @John Brian explicitly said that he had no seller finance experience in land selling so he is giving advice in a niche he does not have experience in. If I give advice or expect people to listen to it, I would at least have experience in the subject I am offering advice in. People who don't have experience in a particular subject tend to think the worst about it and prefer to put up warning signs instead of pointers of what to avoid and how they approached the problem when they were in my shoes. So if someone in bigger pockets has walked my path or is currently walking that path, I would welcome their advice because in my opinion they are more than qualify to offer the advice and I would be more willing to follow their advice. 

That's fine, so long as you remember you've ALREADY been told that you're in legally risky terrain!

I could be snarky, but I will not! My advice was for you to CYA. 

I wish you good luck!

Originally posted by @Enrique Reyes :

@Brent Coombs no sarcasm was intended. I am sincerely grateful for the advice but I have no intention of following that advice. Please don't tell me I won't be successful because I won't follow their advice. I do not intend to offend but I am asking advice from individuals experience with Seller finance specifically for land. @John Brian explicitly said that he had no seller finance experience in land selling so he is giving advice in a niche he does not have experience in. If I give advice or expect people to listen to it, I would at least have experience in the subject I am offering advice in. People who don't have experience in a particular subject tend to think the worst about it and prefer to put up warning signs instead of pointers of what to avoid and how they approached the problem when they were in my shoes. So if someone in bigger pockets has walked my path or is currently walking that path, I would welcome their advice because in my opinion they are more than qualify to offer the advice and I would be more willing to follow their advice. 

 Dude, read my profile, I'm pretty sure I've done more seller financed deals than anyone on BP, notice the private/seller financing servicing company, 5 states, over a thousand in portfolio, servicing, guaranteed the notes, bought notes, commercial and residential, so what I told you does come from experience, a heck of a lot of it. 

What you seem to want is some 5 step program to do a deal, you can wait for some nit wit to post that may tell you something you'd like to hear, but there is no such thing, sorry.

So, you want to do brain surgery and you want some surgeon to give you pointers in a forum of what to avoid. How about, avoid doing brain surgery! See a real surgeon, that's why they get paid so much, because everyone can't do it.

If you've made up your mind to do this yourself with that borrower, then just get a note off a shelf  at a business forms store along with a deed of trust, fill them out, appoint an attorney out of the phone book in FL in that area, (just call and ask, most likely they will say sure, appoint me! it costs you nothing!) Take that to closing, by law you can't close it yourself. Then collect payments.

Then, when things go south, reread this thread. Good luck :) 

Well this escalated quickly........

Joseph B. Davisson your answer was so simple I overlooked it. I wanted to thank you for sharing. So far my seller finance deal is going well. I receive my monthly payments on time and I have no complains. 

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