When to Foreclose

Question

I owner financed a property that I own.  10 years.  1000$ per month.  8% apr. I got a great sales price.  I used an attorney.  Deed of trust and promissory note.  Buyers paid down payment.  They made 2 payments on time.  All was looking good.

Insurance (required) was purchased then canceled due to non payment.

Third payment is nearly one month late.  Fourth payment coming due soon.

I spoke with buyers.  Promised to pay, had an emergency, etc.  No payment.

I found an attorney to start foreclosure.  Not bad will cost me $800. I am just wondering when.  Should I proceed.  Should I wait.

Attorney advised me to get insurance and pay out of pocket.  I found a hazard policy and will get that today.  It covers 80k cost me $100 a month.

Any advise appreciated.  I know you will ask why not contract for deed?  The HOA does not allow rentals or contract for deed.  Promissary note, deed of trust was only option.

Wayne Brooks · Answer

@Jason Lee Regardless of what your Note says, you have to follow state and federal laws that apply to you. Most foreclosure laws require 90 days delinquent, your attorney should know the applicable laws.

Jason Lee · Answer

My promissory note basically says if one payment is missed then the entire balance of the note is due in full with or without notice.  The attorney who prepared everything for me said it would a fast non judicial foreclosure.

I am still ahead by a little bit even if I have to pay for foreclosure.  But if they tear the place up in anger well then I lose so that is my main concern.

I was going to speak to them one last time and offer cash for keys.  I will give them what I would pay the attorney for foreclosure if they leave the place clean, sign a quit claim deed, and move out on a date we both agree on.  I dunno if this is a good move or not and is really why I am here asking more experienced folks about it.

So back to my original question.  How long should I wait here a few days, another week or just go ahead and pay the attorney to start foreclosure.  I already sent them all the paper work and they are ready to do a substitute of trustee whenever I pay them.

Scott E. · Answer

I don't think there is even any question to consider here. When to foreclose? Do this exactly by the book. Follow the terms of the contract you entered with this buyer (note and deed of trust), and follow the foreclosure process outlined by your state.

Hopefully the buyers down payment at least pays for all attorney fees.