Agreement For Deed Not Being Honored....
I am a mortgage broker. An 'investor' approached me about obtaining financing for his 'renters'. He told me the sales price was 298k. After talking to the 'renter' I found out the following:
1. He bailed them out of a 198k foreclosre 1 year ago on the property. His mortgage is for 263k on the property currently and had a signed agreement with them that he would give them 26k for the downpayment when they purchased the property back.
2. They have a signed agreement for deed stating that they may purchase the home for "the amount of the current mortgage payoff plus 5k".
Now this guy is trying to tell them that because the new loan amount would be 263k and he is giving them 15% equity it is the same thing.
The way they and I view it, is that according to the original contract, the sales price should be the payoff for his loan (263k) plus he is giving them 26k at closing.
Is he trying to screw these people over or is it just me??
How legally binding is an agreement for deed. He never recorded it, but it is signed. What if he puts the property up for sale for 298k and sells it out from under them? Can he do that if they are already on contract with the agreement for deed?
This is worth talking to an attorney about.
The second thing I would probably do is record the agreement. That will put on notice any other person he tries to sell the property to.
Can a copy of the agreement be used to record? It was not notarized.
Probably not, An attorney could file a lis pendens that would put the world on notice of their agreement.
Each state has different recording requirements. Have them call a title company or the county directly and see if it can be recorded.
Only a signed, notarized original doc can be recorded, and even then it has to meet the state statutes about recording.
States have different laws about what can be recorded...for instance in CA, a Notice of Interest in a property cannot legally be recorded (and the recorder will send it back with a letter of rejection!), while in many other states it can be.
It's a fairly simple bit of online research to find recording laws in most any state.
e.g.: "deed records TX" would probably work on most any search engine to find the TX statutes on recording very quickly.
The minimum information legally required in the written agreement includes:
Identification of the seller and buyer.
An adequate description of the property.
The purchase price or other consideration.
The parties to the contract who are obligated by the agreement must be identified by their legal names.
The seller’s spouse and any other party who has ownership interest in the property should be included in the contract so the buyer will be guaranteed the participation of the spouse in the later transfer by deed.
The land description is adequate if the land can be located by referring to the installment land contract. The description should be a formal, legal one. Usually this description is in terms of the Rectangular Survey System, also called the government survey method, using sections, townships, and ranges.
The total price agreed to by buyer and seller must be stated although the exact conditions of the payment need not be specified. It is highly recommended, however, that such terms be spelled out in detail to avoid controversies.
Signatures - Signatures of all parties named in the land contract should be obtained. If a corporation acts either as seller or buyer, the instrument must be signed by an officer with proper corporate authority, and in some states, the corporate seal should be affixed. If a partnership is the buyer or seller, all partners should sign the contract. If the contract is to be recorded, the signatures should be made before a notary public or otherwise acknowledged.
Sufficient copies of the installment land contract should be made so each signer can have a copy.
The original is usually returned to one of the parties after it has been recorded.
If the contract is not structured properly, it will not be considered valid.
[addsig]
thanks for all your help!