Hi there - my landlord has notified he wants to sell - I don't want to move. I am about a year away from being able to buy on my own, and was looking at contract for deed as an option. While learning about this, to hopefully propose it to him, I found out he took out a mortgage on the house about a year ago (was previously paid-off). Learning more - looks like DOS clause could get in the way of my contract plan. Is there anyway around this that I just haven't found yet? Thanks for your help.
Sorry for the delay, I was pretty busy this past weekend.
My Gut tells me something is wrong. If he is looking to sell, why would he get a mortgage on a paid off house? This tells me either he does not truly want to sell, he thinks you will not actually buy or his terms are such that it is unlikely you will be able to complete the sale. It could also indicate he has an urgent need for cash and that could lead to several issues (unpaid taxes, unpaid mortgage/foreclosure, deferred maint and so on). What if you put down a size-able downpayment, make payments on an agreement for deed for a year or three, then you find out he owes more than the payoff amount and he does not have the cash to pay it off so you can take ownership? My suggestion is keep saving for a down payment, keep working on your credit (if that is an issue), and keep looking for a house that you want to call yours. This might be it but only if you are able to purchase outside of owner financing i fear. In the meantime, enjoy the house you have called Home for a while and hope for the best.
I re-read your post and the DOS clause is standard in almost all mortgages since the 80's. I am not saying it is nothing to worry about but I have never personally heard of a bank calling a performing loan using this clause (even though they are well within their rights to do so). Going back to my original post, if he had plans to sell but still took out a loan he may have financial issues that required the cash immediately. IF he fails to make a payment and the bank gets wind of the agreement for deed or other sales contract, they would be more likely to call the loan. Just a few more thoughts. In the meantime, if he truly wants to sell and lists the home, there is not much you can do. You did not say how long you have lived there and that information could emphasize my points or be a non-issue. The longer you have been there, the more likely it is he has a financial issue, (assuming you pay on time and dont require lots of maint).
Try an option if you don't want to move. Agree on a price to purchase the house in the future one or two years. Make sure your credit is good so you can qualify for a loan. You can check at the assessors office for liens and taxes.
Thanks for the insights, Tim. I think they took the mortgage as a way to fund their other investments, and now they are done with this one. Reading and reading and studying these forums, i am thinking finding another investor to buy and contract to me is going to be my only option. Current landlord won't risk the bank calling the note, which is a respectable choice.
@Rachel Latham I don't know Illinois law but most leases have to be honored. If you are going to pay retail for the property in a year he will make more money by not paying a real estate commision by selling to you. You pay a nominal option fee and lock in the price. You other option is FHA loan with 3 1/2% down and buy now. Just for your information use the @ sign before the name so they are notified when you reply.