# One of many Owner financing questions



## obleo+6 (Jul 21, 2008)

Okay, so we found an owner finance place...at closing we get everything in our name. The "owner" is signing everything over, no problems there. But I had a thought...what if, for some reason, he has to file bankruptcy? 

According to my info, he would be just a lien holder on the property and nothing else, the title and deed will be in our names, not his....so the bankruptcy courts would not use this as "his property" in his case for settlement to his debtors. How our payments to him every month are handled is up to the court but they can't touch "our" property as long as we remain in good standing and make the payments. IF we default, then it returns to him and it then becomes "his" property again and then the courts can use that as one of his assets.

This is something to think about for those of you who are looking for owner financing places. If the thought of "what if" crosses your mind about anything, do some research and check it out before signing on the dotted line.

If I'm wrong, then feel free to enlighten me...at my age you can still learn something new...pretty amazing, huh?


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## Waiting Falcon (Nov 25, 2010)

Have you had a lawyer confirm this in writing?


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## ozarkchaz (Feb 4, 2005)

> The "owner" is signing everything over, no problems there


Something does not sound right. Why would the owner / seller want to put your name on the deed (legal ownership), before paying off the seller financed loan first? Is there a Quit Claim or Warranty Deed involved?

Caveat Emptor (buyer beware). A title search is in order for ANY property Transaction (title co.). And, Just to be safe...Consult an attorney that specializes in Real Estate, for this transaction.

Congratulations on finding the property.... Good luck!


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## obleo+6 (Jul 21, 2008)

Yes, a title company is doing all the work and warranty deed involved. Title search is being done by them. Title insurance, also. The people that are in the house now had all the paper work when they bought it. We read it ALL and then read it again. We bought them out and are picking up where they left off on the balance.

Still waiting on the attorney's final say. But yes, buyer beware...and we are doing our best to cover all the bases before next Friday.

Although the owner has been up front with us and we have talked quite a bit in the interim, we still want to make sure it's all done legally and no chances later for "He said...she said". If it's not in writing and recorded properly, it ain't happening.

We are "your word is your bond" type people but when it comes to business and real estate and, for that matter, pretty much anything else in this day and age...we go the legal route. Cost more but things aren't like they used to be. Shame, isn't it?


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## Cyngbaeld (May 20, 2004)

If he is still making payments to the bank, you MUST get that mortgage in your name or you have no control over whether he makes the payments to the bank or not. He can take your payments and do whatever he wants and the bank will come after the house. I'm not clear from what you posted about whether or not he owes money on that property.


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## ChristieAcres (Apr 11, 2009)

Everything the OP described is what occurs when Realtors are involved, except 3rd party Escrow is used. How I understand the OP, is there were Buyers making payments to a Seller. They wanted out, so the 0+6 is taking over making the payments to that same Seller (Owner Financing). The Sale is being Recorded, and the current Seller becomes the Lien Holder (just like when a Bank finances for Borrowers). This was a good explanation, saw it online:

*If the property is free and clear, meaning the seller has clear title without any loans, the seller might agree to carry all the financing. In that instance, the buyer and seller agree upon an interest rate, monthly payment amount and term of the loan, and the buyer pays the seller for the seller's equity on an installment basis.*
* The security instrument is generally recorded in the public records, which protects both parties.*


I have negotiated Seller/Owner Financed Transactions, so am familiar with them. O+6 it sounds just fine, as long as your Attorney reviews and confirms.


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## Joshie (Dec 8, 2008)

Does current owner still have a mortgage on the property? If so, I doubt he could legally sell it to you.


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## ChristieAcres (Apr 11, 2009)

I don't the situation is clearly being understood.

The OP clarified purchasing a home, by taking over the payments of another Buyer who was purchasing the home directly from the Seller, via Seller Financing. So, now, as Buyers, they are purchasing direct from the Seller.

There is NO mortgage company involved!


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## obleo+6 (Jul 21, 2008)

lorichristie said:


> I don't the situation is clearly being understood.
> 
> The OP clarified purchasing a home, by taking over the payments of another Buyer who was purchasing the home directly from the Seller, via Seller Financing. So, now, as Buyers, they are purchasing direct from the Seller.
> 
> There is NO mortgage company involved!



Thank you lorichristie, that's it exactly. No liens, no mortgage, the house and land is free and clear. He (owner finance/seller) owns it outright and we are making the payments to him. We bought out the present owners equity and they let us read their agreement with the owner (owner finance/seller) they were paying to. We will have the same agreement. After many questions and research, we own it, with him as just a lien holder on it...nothing else. 

We have been blessed! But due diligence for all when dealing with something like this. My brain is about to explode from all the who, what, when, where, how and why's of this deal...but I did learn something new and it was all worth it.

Thanks all for your input. Closing is on Friday and I've never been so happy to be swimming in moving boxes!


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## ItchingDuck (Jan 25, 2012)

We actually "purchased" a home on land contract in which we took over the sellers payments. Bad idea and we lost thousands. 
Now we are in a home with "seller financing". It is written up with the seller as the "lien holder" and us as the "purchasers". It is exactly like a mortgage. It is working well from a financial perspective.
However, what we didn't realize is that his son was an insane jerk and turned the surrounding landowners against us because he felt his dad should have given him the property vs selling it to us.


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