Investor · Canton, MI · Member since 2014 · 132 posts · 32 votes
I have a seller willing to carry back financing. What is the best way to do this in Michigan? The seller mentioned a land contract. I heard there are risks to the buyer with this option? Are notes a better option? What do you recommend?
I probably will need to run this by a real estate attorney. Can anyone refer me to a good real estate attorney in the Canton, Plymouth, Livonia, Westland, Ann Arbor area?
Investor · Ann Arbor, MI · Member since 2016 · 69 posts · 38 votes
9y
Hey Joe,
I like the concept of land contracts, and they are very popular in Michigan. Typically they are structure as follows: $X money down, $Y monthly payments, and $Z for a balloon payment after a certain number of years (typically 4-7 from what I've seen).
The main risk to the buyer is the balloon payment. If the buyer cannot get financing during that period or does not have enough cash, then they will forfeit their initial deposit and be out that money. Other than that, I think it's a good tool to use if your credit score needs some work or you just don't want to finance immediately. Good luck!
Investor · Canton, MI · Member since 2014 · 132 posts · 32 votes
9y
Thanks everyone,
I read somewhere with a land contact, title does not actually transfer to the buyer and there are potential risks with that..? What happens if the owner gets sued or something, is it possible for collectors to go after the property that was sold on land contract?
Land Contracts are used in Michigan. I bought many properties over the years on Land Contracts and never had a problem. Just my opinion.
I just heard a fantastic nightmare land contract story the other day. It involved drunken claims that a house would be burned down to collect insurance money, a house actually being burned down to collect insurance money, bank fraud, fraud against the vendor under the land contract, tracking someone down via Facebook in order to sue them, etc. It was a doozy.
I read somewhere with a land contact, title does not actually transfer to the buyer and there are potential risks with that..? What happens if the owner gets sued or something, is it possible for collectors to go after the property that was sold on land contract?
Equitable title transfers once the contract is signed. Actual title (i.e. a deed) doesn't transfer until you pay off the land contract and get the deed.
Virginia (NVA area) · Member since 2018 · 8 posts · 0 votes
7y
Hey everyone.
I was reading this thread, I am also trying to do a seller financing deal.
Here are my questions I have that are keeping me from moving forward.
*my seller owns free and clear
1. Is there a way to obtain the Deed from seller with seller financing? Or is "equitable title" enough to allow me to then seller finance or Lease option to new buyer?
2. Does anyone know what contract is used in VA for seller financing?
3. What is the note? Attorney I spoke with says I would need a note and contract and Deed of trust? What is the note doing?
4. Also a title company I spoke with to obtain pricing and (feel them out).. they looked at me like I was crazy when I asked if they had closed any seller financed deals that then were also seller financed to new buyer. (I stay in middle) they said "why would anyone buy with $220k lean on the property already? That would be hard to convince a buyer to buy when 2 liens on any property, not sure how that would be done".
I have been learning about this for months and everyone says you can use seller finance and then turn around and use the same for new buyer. (I'm the investor in middle)
Thank you for your help, and expertise in this would be HUGELY appreciated!!!!!!