Day R asked:
I purchased a home for 75k on a land contract. I gave the owner 50k down with the balance (25k) due in 5 years. I now do not want the home anymore. Is it in my rights to sell the home? For example, can I sell the home for 50k, pay 25k to the Land Contract holder and pocket the rest?
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Thursday, December 24th, 2009 at 5:49 pm
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December 26th, 2009 at 7:27 am
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you sure can. Just pay off the balance at the closing.
December 26th, 2009 at 11:28 am
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Yes, but since you aren’t in title (you have equitable title, but not fee simple title) the person you bought it from would have to issue a deed to your buyer. Before you go any further you should have the title searched by a title insurance company. You need to make sure the seller can convey marketable title and any liens that may have attached to the land must satisfied.
realtor.sailor
December 27th, 2009 at 10:07 am
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No if you still have a balance you aren’t the owner. You have to pay the current owner off before you can sell a property.
Edit: I mean I guess if you paid off the current owner at the closing.
Regarding your price, you realize you aren’t pocketing anything technically right? You are taking a loss on the property.
December 29th, 2009 at 3:51 pm
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Yes, you can sell the home..
You simply must pay the prior owner the principal and interest due at closing.
The prior owner is legally required to provide marketable title when you pay off the land contract — usually this is a warranty deed that provides proof you are getting title free of all liens and encumbrances
BTW unless the land contract says that it is not assumable, you can also sell the home for $50k have the buyer put $25K down which you pocket and have the buyer assume the land contract.
January 1st, 2010 at 1:16 am
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You can only sell it if you are holding the deed. Usually with a land contract the “purchaser” does not receive the deed, as it is a contract to pay for the property later.
All you really need to know is who legally owns the property, if you never received title you are a glorified renter and have no legal right to sell the property.
January 3rd, 2010 at 4:25 am
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I would say no since you are not the legal owner of the property yet. If the deed is not in your name, you do not own it nor have the right to sell it. You can try working something out with the owner on this though
January 5th, 2010 at 4:08 am
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Back-To-Back Closings
Seasoning-of-Title Problem
The terms (land contract / bond for title / contract for deed) may differ around the country but this is a common transaction in the real estate investing world. Find a title company (or closing attorney) that works with real estate investors on a regular basis.
Since you have equitable title and the right to “close” by paying off the balance due under the Land Contract and acquire legal title, back-to-back closings may be possible.
If the title if clear and you do not run into a seasoning-of-title problem with your buyer’s lender, you can do this with back-to-back closings.
Seasoning-of-title means you may need to own the property for 90 days or more before most lenders will do a loan for a new buyer. If you recorded your Land Contract when you “purchased” the property that may help with the seasoning-of- title issue, depending on the title company and lender. If you buyer is paying cash, seasoning-of-title is not an issue with most title companies.
Good Luck and Best Wishes