What should I do?

farmgal · #1 06/10/06, 09:26 AM

Long story short. I have been injured and since then have trouble working fulltime. Meaning, paying the mortgage is tough. Some months my neck is ok and the bills get payed then other months my neck is bad and I get behind.
So I have had my home forsale and it has sold and unsold and people are hardley looking. When the house sells I will move on to my 73 acres left over free and clear of any mortages and all money made can be put into it. I can start living my life and my sons also. We have a gaswell there and a windmill so we will have very little bills. We want to start living our homestead dream again and this is the only way I see how.

My delema is I been offered 1000$ a month from a family I know. they keep their home and yard very clean and know how to fix things. They want me to hold the mortgage. They would have to pay this for about 15 years. I know they have the money, he is disabled and gets over $1400 a month and she works fulltime. Their credit got bad from his accident. I will get 5000$ down. all would be written up in contract. including failure to pay and no painting of the natural woodwork etc.

I worry as I had 3 rental properties and I have seen what someone can do to a home. as well as how much it can take $$wise to get them out if they dont pay. But these folks have had rental properties also and know the same stuff.

What would you do??

Do you see any future problems?, maybe something to add to the contract?

Has anyone done this and regretted or was happy they did?

Marie << ready to start playing with money instead of just paying bills with it

Lilandra · #2 06/10/06, 09:58 AM

Sounds like a good solution to both your troubles...
I'd do all this with help of a good property lawyer just so everything is fair on both sides and neither of you miss anything that could be a problem in the future.

We bought our house on contract terms from family and had a great lawyer involved, kept the surprizes out of it and the heavy issues from dividing family

good luck
((HUGS))

texican · #3 06/10/06, 10:11 AM

Hi Marie
Do they pay all property taxes?

I'd require a full coverage insurance policy... I think most mortage holders require that...

Not a mortgage holder, so I don't know... what kind of taxes will you have to pay on the 12k/year? That's a fair piece of change, but if uncle sammie gets his share..........

Oh, I'd take lots of pictures... and then some more, documenting everything, in the off case that something should turn bad...

Phil >>>who's still jealous of your windmill...

fordy · #4 06/10/06, 12:24 PM

...................Several items , (1) do you have a habitable , livable home on the 73 acres or , will you have to acquire a mortgage for a home on your land ? , (2) If , you decide to carry the paper I'd require the husband to takeOUT a decreasing Term life insurance policy that pays OFF the Principal Balance of the loan directly INTO your estate bypassing any trust or probate proceedings if the husband dies . (3) I'd also require the same type of policy for the wife , and in addition I'd require the wife to takeout a insurance policy that pays everything off if she was to become Disabled and can't work . Credit Unions make these types of Disability insurance available too their members . I'm not sure if regular banks or Mortgage companies do or not . Even IF , the disability policy(on the wife) won't cover their mortgage payment TOO you , it will payoff most car\equipment loans which will freeup cash that would have otherwise been paid out of the 1400 amonth disability income for vehicle payments .
....................If , you trust these people and they agree to obtain the proper insurance protection , there is no reason you can't become the "bank" and make a profit as well . good luck , fordy...

Siryet · #5 06/10/06, 12:32 PM

First thing I would do is make sure their credit did indeed get messed up because of his medical. Then I would do a search for liens against his name that might be attached to the property at a later date. Then I would check to see if there are any pending liens or lawsuits against their names and I would want to see a recent copy of their IRS Tax filing and check to see that they don't have any present or future IRS liens.

I would require that they provide a full coverage Title insurance policy.

Not long ago someone on this board sold a piece of property, I believe owner contract, and the people sold all the good timber off the property and then skipped. Learn and listen from others mistakes and experiences.

Then get a GOOD real estate lawyer to write the contract up to YOUR benefit not theirs. Cover your butt in all ways from Sunday

comfortablynumb · #6 06/10/06, 12:56 PM

do not deal business with relitves.

you wont poop right for the rest of your life.

emulkahi1 · #7 06/10/06, 01:40 PM

Quote:

Originally Posted by Siryet

First thing I would do is make sure their credit did indeed get messed up because of his medical. Then I would do a search for liens against his name that might be attached to the property at a later date. Then I would check to see if there are any pending liens or lawsuits against their names and I would want to see a recent copy of their IRS Tax filing and check to see that they don't have any present or future IRS liens.

I would require that they provide a full coverage Title insurance policy.

Not long ago someone on this board sold a piece of property, I believe owner contract, and the people sold all the good timber off the property and then skipped. Learn and listen from others mistakes and experiences.

Then get a GOOD real estate lawyer to write the contract up to YOUR benefit not theirs. Cover your butt in all ways from Sunday

I would agree. Do not allow the fact that they are friends of yours keep you from going through all of the expected steps that one would normally take if going into an arrangement with strangers. DH and I made a mistake like that (trusted the word of a 'friend' and didn't take the appropriate steps to protect ourselves) and found ourselves deeply in debt as a result. The man we dealt with still does not recognize the (very significant) role he played in the whole mess. And, needless to say, we are no longer friends.

Be very careful, dot all your i's, cross all your t's, and all that. And hopefully you will be able to avoid mistakes such as the one we made. Best of luck to you!

Erin

Fla Gal · #8 06/10/06, 02:15 PM

Something that happened years ago taught me to not depend on friendship to take care of some situations.

I was about 10 years old at the time. Our parents and we three children were going on a vacation to West Virginia to see family and a male "friend" that my parents were putting up agreed to take care of the house, lawn and my stepmothers guppies.

What we came back to, two weeks later, was a vacant house with an overgrown lawn and a bunch of dead guppies. At least the jerk didn't steal anything that I recall. I was so glad he left.

Three things to remember:

Cover your butt.
Cover your butt.
Cover your butt.

This man was a family friend who's relatives had been friends and neighbors with our family in West Virginia for many years. Just goes to show, you never can tell. By the way, his name was Johnny Fink.

The ironic part?

A partial list from the dictionary on "fink".

fink (fĭngk) Slang.
n. A contemptible person.

intr.v., finked, fink·ing, finks.
To withhold promised support or participation: They said they'd help us, but then finked out.

You've had some excellent advise and it will do you good to do what you can to protect yourself. Good luck with your decision and I hope things work out for the best.

halfpint · #9 06/10/06, 06:49 PM

If you do this, one thing that I would add to the contract is that if they default on payments that the house reverts back to you and all previous payments are considered rent. Make sure you are listed as the leinholder for insurance purposes, and you'll need to make sure that taxes are paid. You'll need to have the mortgage recorded as otherwise they could take out more loans on the property and you would not be the first to receive funds if they file bankruptcy or default on the loan(s).

stef · #10 06/10/06, 09:58 PM

I don't know if you are believer or not, but when I read your post this came immediately to my mind.
It's from the Bible, the book of Proverbs Chapter 6 verses 1-5 from the Amplified Bible

"My son, (or daughter), if you have become security for your neighbor, if you have given your pledge for a stranger or another,
You are snared with the words of your lips, you are caught by the speech of your mouth.
Do this now (at once and earnestly), my son, and deliver yourself when you have put yourself into the power of your neighbor; go, bestir and humble yourself, and beg your neighbor (to pay his debt and thereby release you).
Give not (unnecessary) sleep to your eyes, nor slumber to your eyelids;
Deliver yourself, as a roe or gazelle from the hand of the hunter, and as a bird from the hand of the fowler."

Perhaps, if you have not already entered into agreement with this person, it may not be a wise thing to proceed. Or, if you have already done so, to find a way out.
My best to you.
Stef

rambler · #11 06/10/06, 10:30 PM

Like any business deal, it can go well or it can go poorly.

It sounds like you have thought out many things, and with a proper, legal lease-to-own note, I would consider going ahead with this.

My understanding is you would keep the deed until the last payment - typically - so you wouldn't need a lot of the insurance/ filings etc. You do need the documents that these are lease payments, and any missed & they are done & out, they don't own anything until paid in full.

I suppose there are several ways to do this tho, such as others have mentioned.

If you hold the deed, your risk is at the beginning, when they could possibly damage the place far more than the $5000 down; or the ecconomy crashes & housing becomes worthless & they walk away. Their risk is at the end of the period, when they have paid a whole lot, but can lose the deal with a missed payment or two from the end. Both of you have risk, you get to sleep better & better as time goes on....

You say you know the family. Just know them, sounds good. If they are more like close friends, that can be not so good - hard to mix business & friendship many times.

--->Paul

farmgal · #12 06/11/06, 10:50 AM

I guess, I solved it. First of all I went through the folks bills and found too many problems in their spending habits, so I wont be selling them the house. No way, no how..lol

second, I found out why my home is not getting any lookers. I emailed my realtor through the realtyusa web page and its been 3 weeks and no reply back. so about 10 days ago I had my friend email her and my friend wrote " I am very interested in this home please email me asap" she has not recieved a return email.. so monday I will demand to be released from their contract and I am going to find another realtor and realtor company. Another realtor I spoke with told me my realtor used to work at her firm and was fired for not selling any homes in 3 years!!

So hopefully I can get more exposure with this move.

thanks for all the replies

marie