Rolling art | Main | 007 cam

Sunday, July 31, 2005

Real estate scams

Disclaimer: I am not a lawyer. Nothing herein should be construed to be legal advice. Rather, these are just my observations from working for many years in various law offices.

Some local people have fallen prey to unethical real estate dealers. In one particular case, as detailed in today's SJR (Victims of real-estate scam lose thousands), a woman bought her home on contract for deed. She made her contract payments in a timely manner for ten years. During the term of her contract, the two men she bought it from sold the house to another man. The third party owner subsequently defaulted on his mortgage and the home was foreclosed upon by the finance company. Said finance company evicted the original woman purchaser. She not only lost her house, she lost all the equity she paid into it.

There are a few things in the article I want to address.

Buying contract-for-deed is similar to renting to own.

No more so than making mortgage payments to a bank. It's not furniture. It's real estate. Instead of paying a bank, the purchaser is paying the guy he's buying it from.

Attorneys recommend that buyers file copies of their contract-for-deed agreements with the county recorder's office. Making a contract a public record can protect the buyer.

Okay, I guess, but not necessarily, as later indicated in the article. The buyer should consider going through a reputable title insurance company. The title company will do the same for the purchaser in a contract for deed situation as they would in a mortgage situation.

In addition, most title companies have an escrow department. The escrow department can, for a fee, hold in trust a signed deed to the property. That way, upon making the final payment, the deed can be recorded. Of course, if the purchaser defaults on the contract, the deed can be returned to the seller without recording. It should be noted, though, that when dealing with shady real estate scam artists, this isn't necessarily an ultimate protection.

But a seller in a contract-for-deed transaction still has possession of the title to the property and has the legal right to sell it.

[...] and has the legal right to sell it? It essential that contract for deed purchasers get a lawyer's advice before entering into the contract. The lawyer might suggest language that would allow either party to assign their rights in the contract to another party, but only upon the express written approval of the buyer or seller, as the case may be.

Again, nothing here is legal advice. Just see legal counsel and save a lot of heartache later. It's defnitely worth the few hundred bucks.

Posted by Marie at July 31, 2005 5:57 PM