# "Owner Carry" Horror Stories



## Dusky Beauty (Jan 4, 2012)

"Owner Will Carry"
... It can be a beautiful bank free arrangement making home ownership a dream for some, and a scam nightmare for others. 

Share stories, or tips you've learned in the process to help people not be taken advantage of.

Here's mine:

When DH and I were newlyweds and looking for little places to rent, we looked at a well kept singlewide on a large lot in a rural suburb. 
The owner was a woman who lived in it with her kids when she was a single mom, and now she was remarried and hadn't occupied it in years. When we looked at at, it really felt like "home", and since she hadn't done anything with it, for so long, we asked if she'd be interested in just selling it. 
She jumped on the chance, and we put up a "down payment" that was double the deposit she was asking to rent, a "payment" higher than the rent, and took over sole maintenance on the property-- The plan was to pay it off in 7 years. 

Everything went fine until the woman divorced her husband and informed us of her new address and to not involve her now ex in anything related to the property. A few months later, an elderly gentleman knocked on the door, and asked for her-- apparently she was 3 months behind in land payments for the lot the house was on. We had a lengthy conversation with him stating our interest in the property, and to please let us know if the status of our home changed-- we hoped to salvage the deal somehow and not lose our home... Well when he caught up with her, she called us up furious, stating that she had no intention of having the lot repossessed and our deal was still valid as it was written. 
Shortly after that, she came by when we weren't at home and started peeking in windows, and about 3 weeks later she served us with an eviction, stating that we defaulted on our purchase agreement of "keeping up the property maintenance" -- based on the fact that the lawn was 4" high (but green) and needed to be mowed, and that one of the cheap walmart sets of plastic blinds was partially melted and discolored so there "must have" been a fire in one of the bedrooms. (Actually no.. it melted and discolored in the heat trapped between the window and the curtain one very hot day.)

Oh well... blessing is DH hated his job there, so we sold our dodge pickup, and moved to Oregon, and were very happy there for the next 6 years. :trollface


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## where I want to (Oct 28, 2008)

Well- from the other side.......... I have a friend who had three houses on land contract when suddenly all three were abandoned by their owners. So she had three houses to process for legal reposession (expensive) then try to sell in this very bad market. She basically took a sizable loss on them after having to fix them up to sell.


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## Zilli (Apr 1, 2012)

I am buying mine with the seller doing the financing and so far, so good.

We went through a title company, who also drew up our contract, and everything was recorded with the county.

My seller was more than willing to go with a 30-year contract (probably unheard of with most of these private contracts); he has a much younger wife and saw the payments and interest as a source of income for her later.

A couple of things I did was to make sure there were no pre-payment penalties, meaning I can pay as much extra as I can manage and it all goes to the principle. And I can pay it off at any time.

Also, I turned it over to a bank for "contract collection." Instead of making the payment to the seller, for a start-up fee and a small monthly fee, I make my payments to the bank, they record it and compute the interest, and cut the seller a check. At the end of the year, we both get a tax statement.

In fact, the only glitch in this transaction has been related to the contract collection. The bank I had originally set it up with dropped the service, so I had to find another bank (not all of them do it). I turned it over to my regular bank (I'm not sure why I didn't do that the first time) and it was going really well (very convenient for me since I can just call a branch and have them transfer the money from one of my accounts to the collection account; unfortunately, at this time, it isn't set up for internet banking). And that was going smoothly until my bank raised his (the seller's) monthly fee. He wanted me to just start making the payment directly to a personal account of his - no oversight, no recording. So, I told him I would pay half his fee (since I have three accounts at the bank, they weren't charging me a fee anyway); to be honest, to make sure it was all recorded and that there continues to be a record of payments and interest, etc., I would have been willing to pay all that monthly fee since I figure I have the most to lose if something goes south.

I didn't use an attorney. In hindsight, maybe I should have but the title company seemed to be covering all bases. Hopefully that never comes back to bite me.


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## mekasmom (Jan 19, 2010)

Dusky Beauty said:


> Everything went fine until the woman divorced her husband and informed us of her new address and to not involve her now ex in anything related to the property.


You may have been Ok if you had just found an attorney to take care of the matter. But that is a hassle too.


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## Whisperwindkat (May 28, 2009)

Ok, I'll tell mine. 11 years ago we decided to move here from Georgia to be closer to my mom who is in ill health. We needed a place to keep our horses while we looked for a place to live which could accomodate them. We were living in a camper at my mom's. An old family friend had this small farm that she no longer lived at. The place had gotten to be too much and she had moved to her small cabin at the river. I asked her if we could rent the pasture for a few months while we looked for our own place. She agreed and then two weeks later called me up and asked if we just wanted to buy the property. I told her that we wouldn't be able to do much of anything until our house in Georgia sold but that we did have some money for a small deposit. She said that was fine, we could give her the deposit (9000.00) and pay her x amount a month, half of which would go towards the deposit until we sold our house in Georgia. She drew up a temporary agreement, but didn't really state what the agreement was exactly. She said that she would have her attorney draw up a proper agreement soon. Fast forward close to a year and we hadn't sold the house in Georgia, but had rented it out since we couldn't seem to get any buyers. We went to the bank and applied for a mortgage. We explained our agreement with them about how much we had put down etc. Instead of drawing up the contract for some reason the bank just put down a new price for the house (which was based on what she said she had an appraisal for). Then the house would not pass a bank inspection. We went to another bank and it would pass their inspection either. Both banks said that the house was uninsurable because of the electrical wiring being so old (half the house hasn't been rewired since about the 40s according to the inspector). I told her what the inspectors said and that the banks would not finance ( let her look at their reports) until those things were fixed. She said that she would just have to carry the mortgage. We agreed on the terms and she said that she would have her attorney draw up the papers. Several years pass buy and we proceed to make repairs (foundation, roof, fence, barn, flooring in house, new gutters, new heating, new cooling, etc. etc) We kept asking about the papers from the attorney and she kept putting us off with excuses. Otherwise everything goes pretty fine, until.....she gets sick with pancreatic cancer. We pushed for the papers from the attorney. 3 months before she died she told me that she had it written in her will that her estate would have to carry our mortgage. I still pushed for papers and never got them. 2 weeks before she died we got a visit from her sister (the only heir) who stated that we were renting and where she wanted the rent sent. I said we had a mortgage agreement and she said no you don't. We talked to several attorneys, all of whom said that the only real agreement we have is the first one that is so vaguely worded that it really doesn't say anything. All said that our only recourse if the sister insists that we are renting is to try to get our money back for the repairs and renovations since those fall under landlord responsibilites. Things like the new flooring, paint etc. would not and so we would have to suck up those costs along with the fencing and new addition the the barn, and barn repairs since those things are not necessary for living in the house. So here we are with every penny in a house and on a piece of property that we don't have and probably never will. We are looking and have stopped doing anything to the house and to the farm. Every dime is being saved to look for something else since it could be years before we recoup any of our money we have in this place. The house still wouldn't be mortgageable by a bank since the wiring has not been done yet. We almost had enough rolls of wiring purchased to get started later this year, but that won't happen now. Also, when we replaced the heating we did so because the large underground (think gas station size, not residential size) fuel tank leaked and wouldn't hold fuel oil. The furnace was also so old that parts couldn't be found to repair it anymore. That leaking fuel oil tank is considered an environmental hazard and she would have to disclose it to new buyers or clean it up. The clean up we have priced at around 150,000 to 200,000 dollars. It falls under EPA clean up regulations, not state regulations because of its size. So the good Lord might actually be looking out for us. She won't be able to sell this place for what she thinks it is worth, if she would even be able to place any value on the house. Even though we had foundation repairs done, the foundation guys said that it was a poor foundation obviously poured by a homeowner at some time in the past and was literally crumbling. The problem is that if that part of the foundation goes, the whole back of the house goes. The house is on 3 different foundations, not easy to do like a crawlspace and it literally pulling apart in several different directions. We have measured some of the separation between windows and sills and along the front porch and we know that the front of the house has moved two inches in the past year. My point in all of this is don't trust family friends and don't let life and multiple sources of headaches get in the way of good judgement. We had the move, changing jobs, my mom and so much going on that it was just much easier to trust this woman than it was to insist and stand firm that we get everything in writing. So because of that we have spent thousands of dollars and a whole lot of blood sweat and tears fixing someone else's property and will have to start all over again somewhere else. My only consolation is that the sister won't be able to sell this place anytime soon, especially since she thinks it is worth a load of money. So we have some time to look and have all our ducks in a row. Get it all in writing folks because if you don't I guarantee that you will come out on the short end of the deal in the end. Blessings, Kat


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## PaulNKS (Jan 11, 2009)

The stories show that all these problems could have been prevented if the "buyers" had done their homework and taken care of legal business.

In the state of Kansas, if you buy on contract, you can file an "Affidavit of Equitable Interest" with the county clerk. It helps protect the "buyer" if the "seller" defaults on the property for any reason.... either mortgage or taxes.

Selling or buying on contract is a good way to go for many. Just make certain that you use a real estate attorney and have everything taken care of.


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## Dusky Beauty (Jan 4, 2012)

PaulNKS said:


> The stories show that all these problems could have been prevented if the "buyers" had done their homework and taken care of legal business.
> 
> In the state of Kansas, if you buy on contract, you can file an "Affidavit of Equitable Interest" with the county clerk. It helps protect the "buyer" if the "seller" defaults on the property for any reason.... either mortgage or taxes.
> 
> Selling or buying on contract is a good way to go for many. Just make certain that you use a real estate attorney and have everything taken care of.


Unquestionably, Paul! My anecdote happened when DH and I were 20 and 22, just pups really. Since so many farm properties seem to need to be owner financed these days, I'm hopeful that some forum goers can learn a lot from what can go wrong in the deal. 

Everything in writing! 

SPECIFICS about everything!

Always involve a real estate Attorney!

"Trusting" someone to do right by you as a seller or buyer based on family connections, a common history, or because of their alleged religious beliefs is asking for trouble. Trust only in God, and an iron clad contract.


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## Bandit (Oct 5, 2008)

when we replaced the heating we did so because the large underground (think gas station size, not residential size) fuel tank leaked and wouldn't hold fuel oil. The furnace was also so old that parts couldn't be found to repair it anymore. That leaking fuel oil tank is considered an environmental hazard and she would have to disclose it to new buyers or clean it up. The clean up we have priced at around 150,000 to 200,000 dollars. It falls under EPA clean up regulations, not state regulations because of its size
When She serves You with Eviction Papers ( and she will ) So She can Rent/Sell Her New Gold Mine 

As You leave the property , 
Call the Local office of the EPA and report it , 

Report Spills and Environmental Violations | Resources: Protecting the Environment | US EPA


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## GoldenCityMuse (Apr 15, 2009)

A good written contract is the key indeed!


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## jessimeredith (Sep 12, 2004)

We're just getting into ours but as the seller had been burned multiple times with rent-to-own folks trashing the place then clearing out, the contract is chock full of protections for both sides. We're only planning a 1yr lease (to give us time to finish off the credit cleanup...so far so good anyway) starting in September with purchase via VA loan to be completed by September of next year. There is a clause in there just in case we don't get the loan (we could get one now but would rather wait) stating that we could extend the lease if the seller is notified promptly (aka 90 days). 

We've had it looked over at JAG here and she's had the same at JAG in TX. It's all notarized and filed with the county and a title company.


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## chewie (Jun 9, 2008)

we did seller finance with the land here. went thru a lawyer, which the sellers paid for. we didn't have a dime to spare! also, no down payment. 

now, we did pay a bit high for the property, just a bit, but with those things that made it possible for us made up for it. we could've sold it several times too, its a sweet little spot!

it worked out super for us. without the sellers help, I dont' know what we'd of done.


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## Belfrybat (Feb 21, 2003)

No horror stories here. I've purchased two properties on contract for sale, and paid them both off then turned them around within 10 years for a profit. I sold one 12 years ago and the buyers paid it off early with no problems on either side.

HOWEVER, all were done either through a private attorney or the Title Company so the paperwork was standardized and filed at the courthouse. That way there were protections on either side.


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## KentuckyDreamer (Jan 20, 2012)

I would like to hear from people who walked away. Given my life situation, I need a "land contract" or "owner carry". This week alone I have read two threads of people walking out on a contract. I would like to know some of the reasons people left.

For me, I am 57, I have no interest in moving again at my age. I cannot afford to loose a ten thousand dollar down payment. Once we find our place, they will need to bury me in the compost pile...I do not plan on leaving.


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## Gianni (Dec 9, 2009)

I had a now deceased friend that loved them. He had rentals and several homes that he sold carrying the contract. He always got a "quit claim" and sold some houses several times. He kept the rates high so that when ever someone qualified for a bank loan it was in their best intrest to do so. 
We carried a 3 year loan 25 years ago with intrest only the first year. It worked out OK but my point is you are better off being the carrier than the person financing things. If your credit is not in good shape, or you are underemployed make it your first priority to fix it. Do without cable, and most other luxories[sp] until it is fixed. DD will never have anything as long as she is married to her current husband but she seems Ok with that. Others seem to have a different attitude.


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