A reliable close friend of the family (close enough to actually be a member) is interested in a land contract with my home.
They were not approved for the full amount to purchase so we offered a land contract.
They just don't have enough credit established.
I have never been in this situation before. I trust them, I just wanted to hear someone else's experiences or thoughts on this.
Thanks! :)
2007-06-25 04:05:39 · 5 answers · asked by ~Kim~ 6 in Business & Finance ➔ Renting & Real Estate
They are close, but I don't see them very often. Believe me, as with anyone they would be evicted and taken to court... A deal is a deal. So I'm not all that concerned about the way the family feels. :)
2007-06-25 04:17:20 · update #1
I have seen these rip friendships and families apart. Will you evict them? A land contract has value when the relationship falls apart. It governs that relationship in the future. Can you carry this contract financially for its full term? Is the interest rate sufficient to cover your needs?
2007-06-25 04:14:25 · answer #1 · answered by OPM 7 · 1⤊ 0⤋
If you REALY trust them then the land contract should be OK, just remember YOU set the terms not them and also remember YOU are responsible for the taxes and insurance on the property untill they payoff the house. Also in some states if you have city water and garbage it has to stay in the property owners name.
The other thing is if you have a mortgage on the house right now, go over your papers and make sure their isn't an owner occupied clause in it. Some mortgages have a clause in it that if you do not reside on the property they can fine you.
When you make your agreement make sure they are paying you enough to pay for the taxes and ins. also check with you accountant because you will half to claim the money on your taxes at the end of the year. Make the agreement so that they are responsible for all repairs and up keep, because if you don't they can have you make the repairs and really it's like you are renting and not selling.
2007-06-25 11:30:43 · answer #2 · answered by Mental 2 · 1⤊ 0⤋
Getting involved with close friends in any kind of situation involving money can be a bad thing. It ruins relationships. If you are bound and determined to do this, have a lawyer draw up documents to insure you will have some means of legal action in case they do not pay you back. Hopefully your family friend will be responsible and reliable and not take advantage of the fact you are friends. Be prepared however to have the friendship ruined if they do not make payments and you have to evict them. Sometimes this works out, and sometimes it doesn't. Question this, why were they not approved for the amount to purchase? Was it because they don't make enough money to pay it back. Think long and hard about this.
2007-06-25 11:15:32 · answer #3 · answered by Kathleen M 4 · 1⤊ 0⤋
It would probably be better to let them borrow what they can get from a financial institution and then hold a second mortgage for the balance; check with an attorney who specializes in real estate before you agree to anything. I have held mortgages in the past for people and it's nice to get that check every month, instead of writing one out to the bank, also, because it's a family member, you can decide on a nominal interest rate if you wish, it will help them establish credit and give you a little extra for a while. Good luck!!!
2007-06-25 11:15:36 · answer #4 · answered by Anonymous · 1⤊ 0⤋
just keep in the back of your mind what you are going to feel toward this person, and the rest of the family towards them or you, if they do not fulfil the contract and you have to evict them. What would happen to your current relationship and the relationship with all your family members?
2007-06-25 11:14:28 · answer #5 · answered by Yes I am here!! 5 · 1⤊ 0⤋