Land contract?

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Latest post 07-26-2011 3:12 PM by Drew. 5 replies.
  • 07-25-2011 1:33 AM

    • Deanae
      Consumer
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    • Joined on 09-02-2010
    • OH
    • Posts 8

    Land contract?

    My husband and I have been buying a house on land contract for almost two years now. Our land contract is written up for a 5 year contract. After the 5 years, we are supposed to own the house. Within the two years, we have made every payment, plus our down payment to get the house, and we have put money into the house as well. My landlord and my husband and I went thru a lawyer to have the land contract made up. Back in April, my husband and I were able to apply for an actual mortgage for our house. We set it up to where we would pay the balance off from what we owed, and used the rest to remodel the house the way we first had attended on doing. This is the end of July, and we still have not signed the papers to close on the house. The lady we are buying the house off of let us know at the end of June that she has to have her house reappraised and it has to appraise for more than 20 percent of what she owes on her house and on [ours]. She did a bridge loan on her house, and the bank will not release the deed to our house until her house is appraised. I have a few questions to this. She made up a land contract through a lawyer. We have every rent receipt and down payment receipt we have ever made. We currently have not paid rent since we were approved for the loan which was I think April or May? We have kids, and the house only is heated by a wood burning furnace. There is no other means of heat, and it is very cold in here in the winter. So my questions are this... my husband and I are also looking at another house to buy, but if we do that, if the lady we are buying our current house tries to sue us for back rent, can she do it since she is not giving me any information as to what is going on with the current loan we are trying to get? And if we do decide to stay at the house we're living in, and her house does not appraise for what it needs to appraise for, can we sue her for trying to sell us a house that she actually wasnt able to? I dont know if what she did was legal because she never talked to her bank before she did our land contract, and she just went thru a lawyer to write it up without letting the bank know so they could be aware of releasing the deed. I'm so confused with this situation. I am trying to look out for my kids' sake and safety.

  • 07-25-2011 11:51 AM In reply to

    Re: Land contract?

    Deanae:
    We currently have not paid rent since we were approved for the loan which was I think April or May?

    That was an incredibly bad idea. You are obligated to continue to make your payments until the close of escrow when the property becomes yours.

    If you tendered or offered the amount due that was stated in your contract and the owner didn't come through and immediately open escrow you would have had a cause of action for specific performance or damages if good title couldn't have been provided.

    Deanae:
    I'm so confused with this situation

    Then you need to take your situation and your contract to a real estate attorney and review your options.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 07-26-2011 11:50 AM In reply to

    • Deanae
      Consumer
    • Not Ranked
    • Joined on 09-02-2010
    • OH
    • Posts 8

    Re: Land contract?

    I understand that we are obligated to pay rent until we close on the house. It took my appraiser a month to appraise our house in order for us to get the loan on it. I talked to my landlord about giving her the rent we owed for April and May, and she had said we could pay it by the middle of June if we hadnt heard anything from our bank. A few days later, we were approved for the loan, so she would get the full amount that we owed. We were supposed to close on the house by the end of June, and a few days before our closing date is when she came to me to inform me of what the bank said. I have all of this in email of her being fine with everything. In my land contract, it is stated that once the full amount is paid that the deed is to be handed over to us, but I understand that the bank does not have to release the deed because the bank is not in our land contract. This is why I am confused because I do not understand how she could do a land contract on a house that she still has a mortgage on without first talking to her bank? This is why I am wondering if what she did was even legal?

  • 07-26-2011 12:13 PM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,151

    Re: Land contract?

    Odds are the original lawyer was in equation to protect her hide, NOT your hide--and we are way short of knowing the details of your deal--especially as they may relate to an accelerated buy out/pay off.

    In theory her payoff problems with her lender should not be your problems--but in practice until she squares up with her lender she will be unable to deliver a clean deed to you. Caution--its possible that she is quite messed up and delivery of a clean deed becomes remote.  Some owners do pocket the money and are unable to close,,,

    Again, no clue what your contract says--but I don't agree its always true you need to continue paying rent if you elected to buy in and stood ready and able to close and the seller defaulted and failed to deliver deed--again devil is in the details.

    You need a lawyer on your side to comment on your precise details..you risk losing it all otherwise.

    Hard to tell if this is a home deal worth saving. But so far you are flying blind.



  • 07-26-2011 12:23 PM In reply to

    Re: Land contract?

    Deanae:
    I do not understand how she could do a land contract on a house that she still has a mortgage on without first talking to her bank?

    The "how" is easy. She already did it. That's "how" she did it.

    Deanae:
    This is why I am wondering if what she did was even legal?

    Yes, it was legal for her to contract to sell the house at some future date. Nothing even remotely legal about that and she has no obligation to get permission from the bank to do it.

    The expectation is that what you pay her at time of purchase would be enough to pay off the existing loans. If it isn't enough then she would have to put up the cash to make up the difference.

    Nothing illegal about that either.

    Where this goes wrong is when she hits a financial snag and is unable to give you good title. Then she's in breach.

    Now you get to decide whether it's worth paying an attorney a large amount of money to salvage the deal or whether it's worth walking away and taking your lumps.

    You can lament "how can this happen" and sue till the cows come home but, If she's belly up financially, you can be 100% right and still lose it all.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 07-26-2011 3:12 PM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,151

    Re: Land contract?

    Also, unless your contract was recorded, its possible other newer creditors of the sellers slipped into line ahead of you with claims against the property...



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