Seller finance buyer dies?? What do I tell seller?

[William Salas]

Hi everyone! This is one of my favorite places for posting about creative real estate.

My question is, what happens (or could happen) if the buyer dies in a seller-financed deal?

I’m making the offer and the seller asked me… but I didn’t have a good answer!

Thanks for any input!
William

[Bill Brandt]

If you’re married or have a partner you could agree to have a life insurance policy for more than the original balance of the mortgage payable to the seller. If you aren’t and you don’t, you could put down a sizeable downpayment and tell them, you’ll agree to an addendum giving them the property back so it’s like they hit the lottery. 

[Don Konipol]

Quote from @William Salas:

Hi everyone! This is one of my favorite places for posting about creative real estate.

My question is, what happens (or could happen) if the buyer dies in a seller-financed deal?

I’m making the offer and the seller asked me… but I didn’t have a good answer!

Thanks for any input!
William

The same thing that happens in any financing where the debtor passes away.
the asset along with the associated mortgage debt becomes part of his estate.
As such, depending on state law, as well as who his heirs are, and how the asset is titled, the note may, along with the asset
1. Go through probate
2. If held jointly with rights of survivorship pass directly to the surviving party
3. If held in a trust go directly to the designated beneficiary
4. If held in a qualified retirement plan go directly to the designated beneficiary
5. If no will exists and no legitimate heirs are found go to the state for liquidation

[William Salas]

Good answers!  That all makes sense, thank you!  I do have a wife, and having her continue to make payments likely the easiest, best answer in this scenario.