There are many reasons why buyers get banks involved in lending them the money to make a home purchase such as offering lower interest rates and variable types of loans. There are just as many reasons why buyers seek out private lending or owner financing though as well. One of those is that they may more easily qualify for a loan even though they have a below-average credit score. If you’re going to offer private lending, then you’ll want to make sure that your contract includes a few very important details in it.
It’s important when offering seller financing that you have an airtight and enforceable contract in place. If you don’t, then it may be more difficult to get someone out of your home than it was getting them into it in the first place. You should also realize that without a legally enforceable contract in hand, you stand to lose your home in an adverse possession claim.
There are essential components that your seller financing agreement needs to have. It needs to specifically state what the loan amount is, what the interest rate that you’re charging is, how much in taxes and insurance are owed and by whom and whether there are any other additional fees.
The contract should specifically state that the buyer is responsible for all home maintenance and repairs. The contract should include what terms of enforcement will take place in the event of a default.
Every sales contract is different. A standard sales contract that you can find online may not necessarily be the best option for you.
Owner financing contracts are designed to protect both the buyer and the seller in the case of any disagreements down the road. All aspects of the contract must be clearly stated. With so much riding on the outcome of the contract, it might be advantageous to contact an experienced real estate attorney here in Jackson who specializes in these types of contracts. Any lawyer who does will know what details need to be included in your agreement so that it will hold up in a Tennessee court of law.