Have questions on paying off land contract

Discussion in 'Homesteading Questions' started by clovis, Sep 6, 2005.

  1. clovis

    clovis Well-Known Member

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    I bought a house on land contract fourteen years ago. The note with the owner was for twenty years.

    I am hoping to pay this house off with a lump sum for the amount I still owe on the house.

    Do I use a certified check from the bank? A check from my personal account?

    The pay off amount is about $20,000.

    Should I ask them to sign a document stating that I have paid this home off in full?

    What do I need to do to finalize this contract at the courthouse? I am in Indiana, if that makes any difference.

    Thank you so much in advance!!!!!!!!!!!!!!!!!
    clove
     
  2. BeesNBunnies

    BeesNBunnies Schnauzer nut

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    Things are different from state to state. I would think that you would contact them and let them know your intentions. Then depending on how things are done in your state...arrange to meet. You would pay them (preferrably with a cashiers check) and they would hand you over the deed to be filed in the courthouse. Normally you will need a notary so you might want to take this into consideration when you meet. In most states it is as simple as that. Be sure you file the deed at your local courthouse so it is on record.
     

  3. edcopp

    edcopp Well-Known Member

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    You will first need to determine exactly how much is owed, ask the holder of the land contract.

    Now here is a TIP that may save you thousands of $$$. Write a note to the seller and ask "If I could pay off your land contract completely within 30 days How much discount would you give me?"

    The seller may be owed $20,000 but he might take $18,000 and you would save $2,000. You do not have to pay him off right now unless you want to.

    To complete the deal you will need to have a release of contract signed and recorded in the court house where the property is. I would hire a lawyer to do this little chore just to be sure that it got done and done right. :goodjob:
     
  4. pistolsmom

    pistolsmom Well-Known Member

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    We bought this place 2 years ago on a land contract. We were told when we had made all the payments OR paid it off in full all we had to do was go to a lawyer and they would finalize everything and officially transfer the deed to us. Also told us at that time we would have to pay the 2% transfer/sales tax or whatever it is called.
     
  5. mysticokra

    mysticokra Well-Known Member

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    You would be wise to get a Title Policy issued. Usually costs around $350.00.
    Not only does it protect your investment, but the company that issues the title policy will research the deed to discover any liens or judgments you may not know about. I believe it is well worth the investment.
     
  6. goatlady

    goatlady Well-Known Member Supporter

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    When you entered into the contract there should have been a Deed prepared that transferred the property from the owners to you, said Deed to be available to be recorded at the time of payoff of the contract. Do you make your payments directly to the owners or to a third party escrow? If to a third party that third party should have the payoff figures and the Deed. DO NOT PAY OFF until you see the Deed or a photocopy of same. Pay off with a certified bank check which is a better record than a personal check - if at all possibly hand deliver the check in exchange for the Deed. Without that recorded Deed the property is NOT yours legally.
     
  7. dlangland

    dlangland dlangland

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    Whatever lawyer drew up the papers for the original owners should be able to answer that for you, and you shouldn't have to pay anything. Yes, I am sure they will want a certified or bank check, and that same lawyer should do the follow-up paperwork for you. In SD, title insurance is automatically done before a sale of any type, even cash. Not the same as Iowa. Different laws in every state. Definitely check into your own state laws if you already haven't. Sometimes the lawyer will sign off on a clear title for you, or insist in the seller paying for a clear abstract. In SD it's always 50/50 but i found in Iowa I could insist that the owner pay the full portion. I am surprised that is not outlined in you contrat. can negotiate that with the seller if it is not already outlined in your contract. I would re-read that first. The lawyer's secretaries are very knowlegeable. I would just call and ask. I know on my 14 1/2 yr. contract for deed, even though I paid the lawyer he put in a clause in that the other party can pay me the full unpaid principal at anytime. It will save you a lot in interest. You will be glad you did it.
     
  8. kasilofhome

    kasilofhome Well-Known Member

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    In Alaska I can prepay my house payment in full and not be charged the interest for the time I will be paying ahead. AK State law forbids and Prepayment penality for a primery home.

    BUT

    My land payment is different. I agreed to a 10 year term at a certain rate of interest and If I pay off early I can get hit with a prepayment penality clause.

    What about getting out your contract and checking to see if this is covered. Also check with your state stat's Because it may say in your contract that there is a prepayment clause but that would be null and void if that was and illegal clause for your state.
     
  9. MikeD

    MikeD Well-Known Member

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    Title insurance - excellent idea and well worth the money at just about any price for the peace of mind.

    Sit down and read EVERY page of what you signed X number of years ago so every detail is fresh in your mind again before you alert anyone to the fact that you may be paying this off. As mentioned, make sure that there is no pre-payment penalty in there and, if there is, you may have to be satisfied with having that waived instead of getting any kind of "discount" for payment in full.

    Regardless of the method of payment that you choose, make a photocopy of the check before you hand it over regardless of whether or not a carbon copy is made. You can never have enough proof of payment when dealing with a mortgage - trust me on that. And if you don't trust me (and I wouldn't but I've seen myself in a dark ally before :D ), search mortgage servicing fraud and/or Fairbanks Capital Corp and/or visit www.msfraud.org .

    Once all of the necessary contracts and paperwork are finished, make sure that you file it all in the proper manner. And, if at all possible, get either a certified copy or, better yet, the original contract that you signed X number of years ago with a "Paid In Full" stamp or notation conspicuously located on the first page. Make sure that that is one of the pages that gets filed.

    If you go ahead with this plan and pay the land off then congratulations are in order because you are then, and only then, actually part of the "American Dream". Those that have to carry a mortgage for X number of years are still only "renting" the American Dream as until you've got that piece of paper stamped "Paid" in your hot little hand "the bank" owns your dream.

    Good luck!
     
  10. clovis

    clovis Well-Known Member

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    Wow!
    Thank you for all the responses!

    The contract, now that I have reread the thing, calls for the sellers to provide title insurance at the time of pay off.

    The contract states that there is no prepayment penalty. The sellers are very well to do people, they laughed when I asked for a discount!

    I have also learned that the contract is recorded at the courthouse in the Recorders office.

    Since I am in a learning mode, can you tell me what advantage using an attorney would have?

    I want to be safe and secure in this deal, but also hate spending cash if I dont have to.

    Thanks!
    clove
     
  11. Mike in Ohio

    Mike in Ohio Well-Known Member

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    You want an "ALTA title insurance policy". Just search on the quoted string on Google. I would definately do the transaction through an escrow agent (most title companies will do this for a fee).

    We are risk adverse so we are willing to pay the extra money to eliminate transaction risks (for example, leins against the property).

    As usual, just my 2 cents.

    Mike
     
  12. dlangland

    dlangland dlangland

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    You don't NEED an attorney as long as you feel comfortable with the process and the paperwork. Hopefully, your contract was initially set up by a legit attorney although he would have represented the seller. I have only used an attorney the one time I had him draw up the actual contract for deed for the farm I sold. When buying property, be it a private cash sale, through a realtor, or at an auction I have always trusted my own ability to read, question, and make calls if necessary, so I have never had a lawyer, but you need to decide your own comfort level. Most everyone else does it the other way.
     
  13. kasilofhome

    kasilofhome Well-Known Member

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    The alta policy protects the lender
    Should there be a problem with the title of the property the lender is paid off and the owner does not pay the money to pay off the lender for land with a messed up title Please do not think that the owner would then get the land free and clear or even one red cent. the rightfull person to the title would still own it

    Example thou far fetch Your grand ma dies and and you in all honestly sell the house. Only to find out the the House belong to her first husband you knew nothing about and is long dead but he has a son from HELL and he want what is his.

    This should have been caught prior to the sale on a prelim but the office screwed up and used the prelim with the bad history report to write the Alta policy
    The OWNERS policy protects the Owners.