Buying real estate using seller financing

[Sue T.]

Hi,
I have a question for people who are experienced with buying real estate using seller financing. Do you guys only use seller financing when the seller owns the property free and clear? If the seller does NOT own the property free and clear, how do you guys ensure that when you pay the seller, the seller pays the bank? How do you ensure that payment calculations are correct? How do you ensure that the seller will remove their lien once you've paid off the balance? What happens if the seller dies before you finish paying off the balance?

Thanks,
Sue

[Don Konipol]

Title transfer does not require that an existing lien be paid off, it can occur subject to. However, as we are all aware the transfer of title will trigger the ability of the note holder to accelerate the note and demand payment in full, although this is a relatively rare occurance. As Joel suggests use of an escrow company should reduce chances of the problems outlined occuring.

Please note that title insurance is a seperate function than the escrow function. Although almost all title companies combine the two, they can be purchased seperately. So that it is not neccessary to purchase title insurance in order to purchase escrow services.