A contract for deed is a method used to buy a home. My general advice about using a contract for deed is to BE CAREFUL, because a contract for deed gives you fewer rights than a traditional mortgage. Most contract for deed agreements only need a small down payment. You agree to pay the seller or his agency the full price over several years. You also agree to pay interest. You receive the deed and full ownership after the last payment is made.
What is Necessary for a Contract for Deed?
You must have a written contract and both you and the seller must sign it. Be sure it has all the terms on which you and the seller have already agreed. Only a written contract can be enforced.
Note: You should always talk with a lawyer before signing a contract for deed!
Should I Record the Contract?
The answer is simply and profoundly, YES. The contract should be recorded at the Recorder?s Office in the county where the contract was made as soon as possible. Recording the contract helps to protect you. Even if the contract says, ?cannot record,? you should still record it. Take the signed document to the County Recorder?s Office to officially record the contract.
Who is Responsible for Repairs?
You are responsible for the repairs after you purchase the property. The seller might have to repair certain problems that existed before you bought it if:
- The seller has agreed to make the repairs
- The seller knew about the defects from city inspections and didn?t tell you
- The seller is guilty of fraud or misrepresentation
Agreement to make repairs: ?A seller may agree to make repairs. If the agreement is in the contract for deed, the seller can be forced to do the repairs. Always get it in writing.
Previous Inspection: ?Many houses have never been inspected. If the city found city code violations during a previous inspection, the seller has to tell you. If the seller does not tell you, then you can call off the contract. You may also get some money back.
Fraud and Misrepresentation: If the seller lies to you about the condition of the home in order to get you to buy it, you may be able to cancel the contract for deed. It?s also possible to force the seller to repair certain problems. The written contract should include the statements made about the house by the seller.
Who is Responsible for Real Estate Taxes and Home Owner?s Insurance?
The buyer must pay for real estate taxes and insurance on the property after the sale of the home. You will need to find out if the seller owes any back taxes on the property. If there are any back taxes due, the contract for deed should state who will pay them.
How Can I Prevent the Loss of My Home?
If you fail to make payments under the contract for deed, the seller can end the contract. The seller must inform you that they want to end the contract. The seller has to wait 30 days before going to court to have you evicted. If you pay what is due within those 30 days, the case usually won?t go to court. The contract will then continue.
If the case makes it to court, you and the owner will argue your cases before the judge. If the judge rules in the owner?s favor, you may still have a chance to keep the contract. To do this, you must have already paid 25% of the total price of the contract. If this has been done, the court must grant at least 60 days (up to 180) to pay the seller the amount that is due. If you pay what is due, you get to keep the house and continue to pay according to the terms of the contract. If you have not paid over 25% of the total price, the judge still might grant some extra time. However, the judge could also give the house to the seller, evict you, and cancel the contract.
Barbara Sherer and her team at Sherer Law Offices are highly experienced in the area of Real Estate and Contract Law. With over 20 years of experience, they can guide you through the contract for deed process.
Contact Sherer Law Offices today or call 618-692-6656.