I have a house that I sold on a land contract. So I created a note and there is an underlying mortgage. Now a few years later the sellers are saying that the house needs a new AC unit ASAP. They don't have money for this, have terrible credit, and are wanting to get the unit with financing through an air conditioning company's financing affiliate.
The buyers found financing companies willing to finance them without credit checks (companies clearly looking to go bankrupt and have layoffs!). However, because I kept the deed from being recorded in the Buyer's name to guard against issues detailed below (this is a William Tingle contract), no one wants to finance them because each financing company wants to be able to put a UCC filing (lien?) against the house so that if the buyer doesn't pay the financing company can come get the unit. And then I just know I'll be responsible for this.
I am strongly against this because (a) they pay me late each month and (b) recently have gone through bankruptcy. Given their history with financing, I see myself as someone who is going to be responsible for the unit and clearing the lien.
This sounds harsh, but it is my contention that the Buyers need to go get a second job, store up the money, and buy themselves an AC unit with cash. I know what it feels like, so I can say that. No one in their family has funds to lend or give them. They feel this is their only option.
I would like to know what you suggest to be done here. Contract language is below with my highlights in bold. This is a big deal so I'd appreciate your direction very much.
Installment Land Contract
"Buyer shall not make any major alteration or addition to the Property that would normally require a city/county permit without first obtaining permission of Seller, which permission shall not be unreasonably withheld or delayed. All expenses incurred in making alterations, additions or improvements to the Property shall be promptly paid by Buyer and Buyer shall furnish copies of said paid bills to Seller together with executed lien releases or lien waivers. Buyer shall keep the Property in a good state of repair during the term thereof. Buyer shall obtain all necessary permits from local government authorities to perform such repairs or additions."
Section 12 (which makes me wonder if a UCC filing is a type of conveyance)
"This agreement is personal to Buyer herein, and no conveyance shall be made of Buyer of the premises herein described, or any part, or any beneficial interest thereof without first obtaining the prior written consent of the Seller. Any conveyance of the property herein described or of any beneficial interest of any type therein in violation of the terms of this paragraph shall entitle Seller to accelerate payment of the obligation secured hereby, and all sums of money secured hereby shall, at the option of Seller, become due and in default whether or not the same are so due and payable and in default by the specific terms hereof. Nothing herein contained shall be construed a novation or release of Buyer or any subsequent owner of liability or obligation under this agreement."
Installment Land Contract Addendum
"Transfer of Interests in Land Contract. Buyer may not assign or transfer any of his rights, including occupancy, in the Installment Land Contract."
is there a possibility that they could convince a HVAC company into putting a new system in, not paying for it and then the company files a lien on the property?
I would get them out now
Bob the answer is yes, but they are under a land contract, so they are not a renter. Although they pay late, they do pay. So they don't stay in default long before curing.
Any other suggestions?
I do 't have a solution for your buyer getting a new AC unit, but I'm confused about something. You say you sold under a land contract, recorded I assume. You also say they executed a Note and a Mortgage? A land contract and a note/mortgage don't go together in the same transaction; the buyers don't have title, so can't grant a mortgage. Clarification?
Wayne I may have mistyped so I'm sorry I confused you. Installment Land Contract.
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