Video Summary

A lease is a landlord-tenant relationship wherein the tenant takes occupancy of the property and agrees to pay a designated monthly amount for a set period of time. In the case of a lease with option purchase, the seller agrees to sell the property to the buyer for a fixed purchase price during the term of the lease. Generally, a certain amount of the monthly rental payments can be applied toward the purchase price. The “option” refers to the buyer’s right to choose whether to purchase the property.

The advantage of a lease with option to purchase is that if the tenant fails to make payments, the buyer may pursue the eviction process rather than the foreclosure process, which takes much less time. In the case of owner financing, a lease with option to purchase is advisable if the buyer does not have a substantial amount of money for a down payment.

If you’re interested in arranging for owner financing as the buyer or seller of a property, please give us a call at (727) 847-2288.

 

Video Summary

An agreement for deed is a form of owner financing wherein the seller retains the title to the property and allows the buyer to take possession of the property. The seller provides equitable title, which means that the buyer has all the legal rights to the property except for legal title, which is held by the seller for the purposes of securing payment. However, Florida law treats an agreement for deed the same as a Note in Mortgage. Our law office generally does not use agreements for deed because there is no particular advantage over a Note in Mortgage.

If you have any questions about buying or selling a house, agreements for deed, notes in mortgage, or other related matters, please give us a call at (727) 847-2288.

 

Video Summary

Hi.  I’m Chip Waller.  I’m often asked about what is owner financing.  Owner financing is whenever someone wishes to sell their real estate, and they’re going to act as the bank and hold the mortgage or note and provide financing for the purchaser so the purchaser does not have to go to a lending institution to borrow the money.

This is advantageous to the purchaser because they don’t have to have the closing costs that banks charge or go through the underwriting requirements.  As far as the seller is concerned, they get a higher rate of interest than what they would on their investments.  The difference as far as getting cash, of course, is that it’s not liquid and that is a downside to owner financing for the seller.

What goes into the owner financing is is how much of a down payment will you receive before you agree to hold the note in mortgage.  This is usually a percentage.  A rule of thumb is to ask at least 20 percent down as a down payment in cash, and then agree to possibly hold the other 80 percent.  The more down payment you receive, the more secure you are.

In dealing with owner financing you want to really be satisfied that if you take back the real estate that you’re financing, it will to be worth what is owed to you.  With this recent economic crash, as far as the real-estate market is concerned, no one could anticipate that the value of property would go down by as much as 50 or 60 percent.  So the rule of thumb of 20 or 30 percent was not a very good rule if you financed property back in 2005 and 2006.

Another thing that you look at in owner financing is the interest rate.  Usually at this time you’re looking anywhere around six, seven, eight percent. Even though borrowers say, “Well, I can go to the bank and get it for four or five,” if you go to the bank and get it for four or five you’ll have a lot more closing costs and a lot bigger hassle.

Then you also need to address how long you’re going to hold the note and mortgage, and that you can keep the payments small, Let’s say you agree to finance it for three years, then you can spread the payments out as if they were going to pay for 30 years, and at the end of three years they have what they call a balloon payment, and they must come up with all of the money, or if you agree to finance it, say, for 15 years, 10 years or 20 years, you can have a level payment called an amortized payment or amortization, and then you get an amortization schedule that goes along with your financing.

The other thing before agreeing to owner financing is that you need to understand what it’s going to take if the buyer fails to make the payments.  You have to go through the mortgage foreclosure process, which takes time, which is probably six to nine months at a minimum.  The cost is anywhere from $2,500.00 to $5,000.00 and up, depending on whether or not it is commercial property and if it’s contested.

So if you have any questions about owner financing, give me a call at 847-2288 and I’ll be glad to talk to you.  Thank you.

 

Video Summary

A Promissory Note is like an IOU — it establishes a debt and the terms of payment. Failure to pay on the note can result in being sued for financial assets.

A mortgage creates a lein against a piece of real estate. Failure to meet the terms of the mortgage leads to foreclosure, which determines the amount of debt owed and leads to sale of the property in question.

A significant difference is that failure to pay on the note can lead to seizure of your assets, whereas foreclosure on a mortgage cannot.

 

Video Summary

Like any other lawsuit, a foreclosure begins with a summons. The party who was served has 20 days to respond to the summons. Attached to the summons is a complaint stating that you have failed to make payments in accord with the terms of your mortgage, and a Lis Pendens, notice of pending action that has been filed.

If you do not respond to the complaint, you will receive a notice of default, and the allegations against you are presumed to have been admitted. After several pleadings, a Motion for Summary Judgment will be filed stating that all the facts are undisputed. The court then sets a hearing with a judge. When a Summary Final Judgment for Foreclosure has been entered, a sale date is set for the property (roughly 30-45 days later). Your property will be sold in an auction for a cash sale. The mortgage holder can bid as much as the amount owed.

Approximately 14 days later, a certificate of title is issued to the purchaser. At this point, the purchaser has the right to request a Writ of Possession which is served on anyone residing in the property. This allows 24 hours to vacate the property, after which the Sheriff can remove the old tenants from the property.

Currently it takes about 1 year to foreclose a mortgage. Some may be pending for 18 months, 2 years, or more depending on the parties involved. If you are in danger of foreclosure, Waller & Mitchell would be happy to provide guidance and will likely be able to extend the length of the foreclosure for you. Please give us a call at (727) 847-2288.