Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this happen?

[Tazfink]

Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this happen?

We sold our home on contract for deed a year ago. The buyer has not been current in their payments since May/June-ish (wife keeps track). They made partial payments in July, none since. Sent them the registered 30-day notice.... You would think after putting 40k down they would try a little harder to keep it. AAAAAARRRRGGGGGHHHH!!!!

BTW we have our old neighbors keepin' watch, just in case.

I am not saying who or where the house is located, I am not going to throw them under the bus like that.

If this is not the place and the admins delete this, I understand.

I thank you for allowing me to vent and any comments or words of support is appreciated.

Tazfink

 

[rburke65]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

What does your contract say in reguard to this situation? You do have a sales contract or a land concract, yes? An attorney?

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

What does your contract say in reguard to this situation? You do have a sales contract or a land concract, yes? An attorney?

Yes, we have spoken with the attorney that handled the Contract initially and he basically said all we have to do is stop in and he will draw up the Eviction Notice and have the Sheriff serve it. He said that we did everything right so far.

The I am not sure if it was a Sales or Land Contract... It was drawn up with the realtor and the lawyer (he is also the States Attorney for the county). So I know that it is done right, not some bar napkin contract.

I am just hoping that we don't wind up getting completely screwed over, hopefully we can come out positively.

 

[sammerdog]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

You took $40 grand down and got payments for 7 or 8 months? Unless they completely trash the place on the way out, sure sounds like you're coming out ahead to me....


....of course, depends if we're talking a $100k house or a $500k house.

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Purchase price of the house was 76,900. I am sure that in the end, we will come out ahead; as we would put the home right back on the market. It is just the matter of us having to make 2 house payments on 1 income.

As much as I would like to say that I have a 2 AND a 3 stall garage. This is not the right way to be able to say it.

Question.... How lenient should we be, they just became current on payments but they still have not re-insured the home? Just by them dropping the insurance was a breach of contract. Do we give them a couple of days, then serve 'em?

I hate to throw them out, but why should they be allowed to slip. I can understand if they are having financial troubles... I know that they could sell 1 or 2 nonessential items (vehicles) and have enough to make at least a few months of payments.

Signed,
Frustrated

PS
Anyone have tonights winning LOTTERY NUMBERS??? They would come in handy and I would split it with ya!!!

 

[TRC51]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Purchase price of the house was 76,900. I am sure that in the end, we will come out ahead; as we would put the home right back on the market. It is just the matter of us having to make 2 house payments on 1 income.

As much as I would like to say that I have a 2 AND a 3 stall garage. This is not the right way to be able to say it.

Question.... How lenient should we be, they just became current on payments but they still have not re-insured the home? Just by them dropping the insurance was a breach of contract. Do we give them a couple of days, then serve 'em?

I hate to throw them out, but why should they be allowed to slip. I can understand if they are having financial troubles... I know that they could sell 1 or 2 nonessential items (vehicles) and have enough to make at least a few months of payments.

Signed,
Frustrated

PS
Anyone have tonights winning LOTTERY NUMBERS??? They would come in handy and I would split it with ya!!!

I have a tenant in my rental give me a problem like this. The best thing I have found to do is talk to them in person and see how they respond. If they respond with... "oh, I'll get you that, I'll get you this... I just need to talk to my cousin's brother inlaw's uncle about getting me the money... blah blah blah". I would start up the eviction papers because it could take a while to get them out... up to three months or more. However, if they respond with, "yeah... I lost my job and it's getting tough. But, I have the following plan in place to get you paid back up". Then you can judge on whether or not you ride out the storm with them. Just keep in mind that evicting can take time... and you want everything noted and in writing. You have to determine how bad it's going to hurt you if you decide to ride it out and the worst case scenario happens (they don't pay another dime and it becomes very difficult to get them out). Courts tend not to kick people out of their "homes" in 30 days or less.

 

[chadster1]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I am guessing that there is a bank mortgage on the property in question since you mentioned making 2 house payments. Your bank may get involved if they find out that there is no insurance on the property. You asked how lenient should you be. How lenient do you think that your bank would be if you got a couple of months behind on your mortgage and dropped your homeowners insurance. Whatever your answer to that question is, that is how lenient you should be with the people that are in your house.

 

[twostory]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I also suggest you talk to them and find out why they are late, and why no insurance?

If they continue to be late, I would start the eviction process. Look at this as a "business deal", do not get too personal. Once you get personal, your business starts to suffer. (Sad but true)

 

[lawfarm]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Getting the house insured should be priority #1, regardless of whether they're paying. If they've come current on rent, I wouldn't try to evict them. It is very doubtful if a judge would let you take a technical default that has been cured and use it as a basis for withholding their deposit and payments.

Proposed solution: YOU need to get insurance on the house, pronto. Get it in your name, as you're still the legal owner. Have the tenant execute an amendment to the contract for deed that authorizes you to maintain the insurance, at their sole cost and expense. If they reimburse you for the insurance, no problem. If they don't reimburse you, they're in default and you can proceed with whatever remedy you deem appropriate. Either way, the house is insured.

If the house mysteriously burned down tomorrow, you'd be on the line with your mortgage on the house.

BTW, unless you informed your lender on this house that you were selling it with a contract for deed, you almost certainly violated the terms of your mortgage by selling the property without their consent and without paying off the mortgage. Likely won't be an issue if the sale is completed and the mortgage is paid off...but I wouldn't go calling the lender and asking for advice.

 

[da34guy]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I also suggest you talk to them and find out why they are late, and why no insurance?

If they continue to be late, I would start the eviction process. Look at this as a "business deal", do not get too personal. Once you get personal, your business starts to suffer. (Sad but true)

I agree, don't let it get personal
"It's business"
They signed the contract.
Boot thier **** out and re-sell

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Getting the house insured should be priority #1, regardless of whether they're paying. If they've come current on rent, I wouldn't try to evict them. It is very doubtful if a judge would let you take a technical default that has been cured and use it as a basis for withholding their deposit and payments.

Proposed solution: YOU need to get insurance on the house, pronto. Get it in your name, as you're still the legal owner. Have the tenant execute an amendment to the contract for deed that authorizes you to maintain the insurance, at their sole cost and expense. If they reimburse you for the insurance, no problem. If they don't reimburse you, they're in default and you can proceed with whatever remedy you deem appropriate. Either way, the house is insured.

If the house mysteriously burned down tomorrow, you'd be on the line with your mortgage on the house.

BTW, unless you informed your lender on this house that you were selling it with a contract for deed, you almost certainly violated the terms of your mortgage by selling the property without their consent and without paying off the mortgage. Likely won't be an issue if the sale is completed and the mortgage is paid off...but I wouldn't go calling the lender and asking for advice.

There is insurance on the house thru the 17th. They apparently cancelled it in August. If something did happen they would not get anything, but we are covered thru that date.

 

[brownbagg]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I would tell them if they can get a bank to fiance the amount owed, Then you could talk, Other than that, evict and sell to somebody else. It just bad to loose a house with over half being paid. I would not keep carring the note but let somebody else take the risk.

 

[AffableCurmudgeon]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

If you have a mortgage on this house, and you are aware that past 9/17, there will be no insurance on the hosue, you will most likely be the one who will be financially responsible for any damage that the hosue may sustain.

At this point, as you stated, the tenants are current on their payments. That being the case, I am not sure that you will be able to convince a judge re eviction. But, you need to cure the insurance issue. Buy it, maintain it and keep accurate records of cost, your time and effort in procuring that insurance.

You didn't mention property taxes. Make sure you are current on those as well. I don't know what your contract provides for, as far as non payment of insurance and taxes on the property are concerned. A good contract should have some provisions that cover these issues. If yours doesn't, amend it. Depending upon the contract provisions, you should be able to recover any expenses you incurred in procuring and maintaining insurance and paying any taxes

Good luck.

 

[Matti]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

How much are payments on $36,900? If they can't make those payments I hardly think they are going to pay someone to execute an amendment to the deed. If they haven't even advised you that they can't make payments I wouldn't be hopeful of them squaring things up. IMHO the ball is in their court to convince you that they can rectify the situation ASAP but I would start the eviction process anyway. If you could give them a break without financial hardship yourself that would be great too but...
This is why I shy away from getting into the rental property game.

ps people usually post this stuff in the OT forum (do we have one?) or title the post as such (off topic)

 

[exes]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I went through this myself...It was horrible, but a happy ending.

If you accepted the payments that they were behind on, you cannot evict/reposess. If you want to evict them, you will have to return all of the past due payments that they paid you and you cannot accept any payments in the future. Evictions/Reposessions on mortgages can take anywhere from 3-9 months unless the buyers decide to give you a "deed in lieu of forclosure".

If they caught up by check, you will need to return the check uncashed along with a letter explaining your intensions to reposess their home. If you cashed the check, get a certified check for the full amount and return it to them with the letter.

What I did in my situation since I really did not want to reposess due to the circumstances is:

1. I had a new contract drawn up giving them six months to refinance. If that did not happen within six months the purchase price raised $10,000. My attorney said that would be motivation for them to pursue other financing options.

2. The house payment to me raised immediately by $150.00 that I put into an account to help cover insurance,repairs,taxes,legal fees etc.

The buyers took a little over a year to refinance, I did get another 10k and avoided a lot of legal fees and potential damage to the house from angry tenants. I should also say that I made the offer to just let them walk without any reporting to the credit agencies. They had put 10k down on the house and wanted it very badly. The housing market had really gone up in that area and they were very happy with the deal as was I....in the end

Sometimes bad things happen to people...I know that most mortgage companies probably do not give s***, but in my case, they were really good people who just had some problems. That was 12 years ago and they are still living in the house and have taken great care of it. I am happy with my decision.

Good Luck to You...I know this is a tough situation and it could go either way. I was lucky and I hope you are too...

 

[Tscott]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

They can't afford the place, they will default again. Get insurance for the house ASAP. The bank can call the note due in full at any time if you breach the terms of the mortgage (i.e. no home owners insurance). You being nice to them could get you sued, and the house repossessed. It sounds harsh, but you need to kick them to the curb as fast as you can. You are probably doing them a favor, as they will most likely rent a cheaper place after you evict them. Maybe they can get there stuff together then.

Tom

 

[bop_pa]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

OK I am a bit confused are you saying that you hold the note or your bank holds the note? If you are holding the note and are actually financing them at the same time, then you are the owner of the home and I believe the typical tenant rules do not apply as you are the home owner. When they default you had the right for them to be removed from the property. They may be paid up, but you also need to ensure they fill their other obligations such as insurance to protect your investment. I would find it hard that they cannot make there payments, sure things happen buy you also need to protect yourself. Bad things that happen to them are not necessary supposed to affect you too. Contact your lawyer for your property options.

 

[rallenc]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I do not think anyone has mentioned the "b" word yet; bankruptcy. This can certainly drag out your timeline substantially, all the while you may receive no payments and you incur legal fees. Make sure you talk to your attorney about this eventuality as it may impact how hard you want to press. Perhaps it's best to work with the borrower; perhaps it best to push so that if they are going to declare B/R its best to get on with it. Your attorney can probably best advise you but quite honestly, the % of people who lose a house for non-payment (as opposed to walk-aways for lack of equity) who do not drag you through the B/R process is relatively small.

Best of luck.

 

[fireguy]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

All the info you have received means nothing. We do not know the laws in your area, we are not lawyers. Today, right know, start a file about this situation. Date todays entry. Monday AM, call your attorney and make an appointment. Date that entry. Get insurance on Monday. Date that entry. Keep the appointment with your attorny. You are not only protecting yourself, but your buyer, your bank and insurance company. You are also showing good faith, belated, but good faith. That may or may not make any difference when the **** hits the fan.

 

[Keep]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I went through this with my house in NC. In the end we had the eviction notice drawn up and served. Once they realized we were not letting them get away without paying anymore (3 months late@ $1350 a month) they took the hint and got caught up. Thing is the husband was a Sheriff and his wife a Parole officer. The guy that served the notice was his boss. Pissed the tenant off but again, they got caught up on payments really quick.

They ended up renting for almost 8 years before they purchased (right before the market crashed last year!!)

Also if they are "renting to own" and the property is still in your name then you are responsible for insuring the "structure" the tenants only need to have "content" insurance. At least thats the law in NC.

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I do not think anyone has mentioned the "b" word yet; bankruptcy. This can certainly drag out your timeline substantially, all the while you may receive no payments and you incur legal fees. Make sure you talk to your attorney about this eventuality as it may impact how hard you want to press. Perhaps it's best to work with the borrower; perhaps it best to push so that if they are going to declare B/R its best to get on with it. Your attorney can probably best advise you but quite honestly, the % of people who lose a house for non-payment (as opposed to walk-aways for lack of equity) who do not drag you through the B/R process is relatively small.

Best of luck.

You hit the nail on the head... They went through bankruptcy approx. 3-5 years ago. How everlong ago it comes off of your credit report, it hasn't come off of thiers yet.

UPDATE!!! They put insurance on it on Friday, thank our blessed lady of accelleration. So we are doing good.... for a while.

To some of the later posters, we have been in contact w/ our lawyer, and we have copies of all the letters (registered and non registered).

 

[Tech Guy]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Just a thought but here in Canada, if you have a mortgage, the lender is indicated on the insurance forms so they get paid first should there be a claim and the insurance company has to inform the listed lender should the insurance lapse or be cancelled. Protects them from the purchaser dumping the insurance and the lender never knowing until it is too late.

 

[boiler7904]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Just a thought but here in Canada, if you have a mortgage, the lender is indicated on the insurance forms so they get paid first should there be a claim and the insurance company has to inform the listed lender should the insurance lapse or be cancelled. Protects them from the purchaser dumping the insurance and the lender never knowing until it is too late.

Same thing here in Indiana.

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Same thing here in Indiana.

That's how we found out that they had cancelled the insurance in Aug. We will have to see how the coming months turn out, hopefully they can keep "walking the line" and stay away from any "dumb a$$" situations.

Thanks to everyone for all of the insight, it has been much appreciated!!!

Tazfink

 

[Rickochet]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Taz,
I was looking through some old threads and read yours. Only to become better educated (and because I must know how mysteries end) what was the resolution for this event? I can only imagine that it has been a nightmare. Hopefully all is well!

 

[Tazfink]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Taz,
I was looking through some old threads and read yours. Only to become better educated (and because I must know how mysteries end) what was the resolution for this event? I can only imagine that it has been a nightmare. Hopefully all is well!

Sorry for the long wait!! Been a way for a while.

We are finished with the whole deal, a little over a year ago.

The couple who purchased the home from us, basically had her parents buy the home from us and sell it back to them on another Contract for Deed.

I am so glad we are done with it... Would I recommend it to anyone?

Not without doing a LOT of leg work before. Take the time to meet with the buyers, make sure they have a plan/budget for paying you. Lay everything out in advance, payment schedules etc. I would also send out the bill every month as a reminder, just like the mortage companies do.

BIG LATE FEES/PENALTIES as well. If they are late or miss a payment, make it "hurt" financially. Miss a month, tack on an extra months payment that does NOT go towards the balance.

Hope this helps and finds you in safe place financially.

Tazfink

 

[SuperSocket]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Since this house is basically a rent to own (they do not own it until they have fulfilled their contractual obligations), should the landlord (you in this case since you are still in possession of this property) not have landlord insurance on your property.

Basically if the place burns down, it's not the tenants that has to file the claim, it is you... if the house burned down tomorrow they have no skin off their backs other than the money they have already invested... you're still the one responsible for the mortgage.


You may want to talk to your insurance agency about this... because that was that I had to do.

 

[neonnblack]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Its not his anymore!

 

[SuperSocket]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Its not his anymore!

If it is not his, then why does he have the responsibility of the mortgage and why would he care if they aren't insuring and why are they paying him?

It's his until the contract has been fulfilled.

 

[mtwaterguy]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

If you'd have read this 2 year old thread you would have figured out that this problem was solved more than a year ago. He no longer has a contract or a mortgage that he's responsible to pay for.

 

[neonnblack]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

If you'd have read this 2 year old thread you would have figured out that this problem was solved more than a year ago. He no longer has a contract or a mortgage that he's responsible to pay for.

That.

 

[MyKingdom]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Congarats...!!! Great Job on getting things done the legal way. I'm going to make a sticky for my self on this.

 

[BBQ&Love]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

I purchased my place on a contract for deed. It was a unique situation and I expect it to end well. For example, I made the guy an offer of a certain interest rate and a 15 year note. He counter offered me with the same details but the interest rate at 1% lower than I offered. We agreed to a compromise pending him talking it over with his wife. They came back and insisted on their number. So I accepted but offered a 7 year balloon, which he accepted.

We have a verbal agreement that I will try to pay $200 extra each month but acknowledge that I am not required to.

I paid extra in December and have it calculated out that if I pay the $200 extra each month I will end up with it paid off with the 84th payment.

The guy was a friend of mine but did his homework. He stated at closing that if he didn't believe it would strengthen out relationship he wouldn't do the deal.

We are only 10 months into the deal but I take getting that check to him very seriously. When a man trusts me like this, hell will have to break loose before I mess this up.

 

[ZipSnipe]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Yeah sounds like it had a almost happy ending!!

However you said they put 40k on a 76k house which should have put their mortgage payment at $380 to $400 a month, how can ya get behind on a cheap mortgage like that?

 

[cdseven95]

Re: Sold Garage & House on Contract for Deed, buyer defaulting... Anyone had this hap

Yeah sounds like it had a almost happy ending!!

However you said they put 40k on a 76k house which should have put their mortgage payment at $380 to $400 a month, how can ya get behind on a cheap mortgage like that?

I would assume anywhere that you can buy a house for 76k the job market isn't the strongest.