-- Answers to Questions About Real Estate Law
Money and real estate news you can use everyday

Real Estate Lawyer
Question of the Week
Tip of the Week
Recommended Books
Contact Sam

Owner Financing Offered to Rental Tenants


By Ilyce R. Glink and Samuel J. Tamkin

Summary: An investment property owner wants to sell their property to the tenants and offer owner financing. Ilyce and Sam suggest an installment purchase.

Q: I've got an investment property that the renter is interested in buying. They are not able to get a typical mortgage because they don’t have conventional credit. However, they pay their rent on time monthly.

I am considering offering them owner financing, but am not sure where to get the documents written up. Also, the house has a mortgage in my name. If I do sell them the house, what will my lender do? What do you recommend?
(article continues below useful links)

A: There are several important legal issues that you need to address before you actually go to the closing, and you’re going to need the help of a good real estate attorney. So find one now, even before you start talking about the sales price with your tenants.

Most likely you’re going to end up selling the property to these buyers on an installment basis. That means, they’re buying the house over time, almost like lay-a-way.

The buyers will start by paying you 5 to 10 percent of the sales price. The property remains in your name, and you – not your buyers – will make the monthly mortgage payments on your mortgage, insurance and real estate taxes. This ensures that the necessary payments are made.

The installment contract with your buyer will include certain provisions that will pay you “interest” on the amount owed by them along with payments for all of your costs associated with the ownership of the home.

When the time comes to transfer title to the home to the buyer, they will pay off whatever remains on the installment contract. You’ll use part of the cash they pay you to payoff your current mortgage.

Installment purchases sound easy, but there are some risks. Again, you need a good real estate attorney to draft up these contracts and make sure you’re protected, so find one with experience with installment sales contracts.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website




RSS Feeds

RSS 0.91 Feed
RSS 1.0 Feed
RSS 2.0 Feed

Home Buying   Using Attorneys to Buy a Home - Earnest Money - Quitclaim Deeds - Easements - Seller Misreprensation - New Construction - Buying with Partners - Home Inspections - Seller Problems - Agent Issues
Home Selling    Using Attorneys to Sell a Home - Seller Disclosure laws - Title Problems - Buyer Problems - Real Estate Agent Issues - Tax Considerations
Home Ownership   Neighbor Problems - Seller Misrepresentation And Fraud Issues - Problems In a Condominium Development - Problems Around The House - New Construction Issues - Subdividing Land
Home Renovation   Architect Issues - Contractor Issues - Problems With Contractors - Inspection Issues - Certificate Of Occupancy - Municipal Inspections - Punch List Issues - Financing Issues - Installment Contracts
Real Estate  
Loan Application Problems - Refinancing Issues - Paying Off An Old Loan - Credit Problems - Seller Recommended Lender - Prepaying A Loan - Prepayment Penalties - Predatory Lenders
1031 Exchanges - Financing Investment Properties - Landlord and Tenant Issues - Partnership and Company Considerations - Tax Considerations - Subdividing Land
Contact Us | Sitemap | Terms of Use | Copyright ©2001-2005. ThinkGlink Inc. All rights reserved.
Reproduction of material from any pages without written permission is strictly prohibited.
Site design by Walker Sands Communications