Protecting my $ interest in an Owner carry flip?

Question

I am trying to get creative with a recent off market deal that was sent my way and was wondering how I might secure my financial interest in a property which I would like the owner to carry the note until time of sale. More specifically, the owner and I would agree on a sales amount (165k), I would finance & complete the renovations along with carrying cost (estimate $15k) , and then sell the property at a higher amount (est $215k) ultimately giving the owner a portion of the profits (20-25%?). I am looking for a legal way to protect myself against the owner changing his mind and living in a newly remodeled home financed by my money. Any help would be appreciated. Thanks so much, Shawn.

Shawn Smith · Answer

Thanks, I appreciate the feedback. I will follow-up with Title first to see if any other liens in place prior to moving forward. Do you happen to have any good resources/templates for these types of contracts or is it best just to bite the bullet & have it drafted by an attorney?

Chris Erwin · Answer

@Shawn Smith If I were in your position, I would put a lien against the property for your monetary interests. I would have the current owner sign a listing agreement with an agent before anything is started on the property, this hopefully gives the current owner the mentality that everything is moving forward with a sale. I would also put a contract together specifying all of the terms of the agreement and consequences of breaking the agreement. Have the current owner sign and notarize the agreement. I would also have a title company run a title report to make sure there are not any outstanding issues on the title. It always best to try and file a lien in 1st position.