Documents to Set Up Owner Financing

Real estate professionals assist with owner financed real estate transactions.
Owner financing occurs when the owner of a property finances a real estate transaction. Owner financing is also referred to as owner or seller carryback and is a non-traditional form of real estate funding. All legal matters in the transaction are negotiated between the buyer and seller. Each party must review and sign several documents to ensure the transaction is conducted legally.

Purchase Contract
One of the most important documents used in an owner financed real estate transaction is the purchase agreement or contract. This contract specifies that the transaction is a seller-financed deal and lists the consideration involved in the transaction. The contract lists the property address and if the property is being sold in as-is condition. The contract also lists the purchase price of the property, the down payment and the amount financed. The purchase contract also details who is responsible for paying the insurance and property taxes on the home as well as to whom the monthly mortgage payments will be paid.

Owner Carryback Disclosure
An owner financing disclosure document details information about the mortgage note. This document defines the mortgage amount, number of installments and installment amounts plus interest. The disclosure also specifies that the note is secured by the property. Title conditions and escrow information are also included in the owner financing disclosure statement.

Transfer Disclosure
A real estate transfer document discloses the condition of the property to be sold and the physical characteristics of the property. In this document, the seller discloses what is included in the property at the time of sale such as appliances, central heating and air, water softener, garage door openers, hot tubs, alarm systems and many other items. The disclosure identifies if these items are in working order or if they need repair. Further, the disclosure describes the age of the home, type of wiring and roof type. The seller discloses items with significant defects, if known.

Funding Disclosure
A funding disclosure is a document that outlines funding and closing information. It details when down payment funds are due after closing and the responsibilities of the closing agents once the real estate transaction has been completed.


source : Sherrie Scott