Contract for deed advice??

34saving · #1 (**permalink**) 02-13-2006, 06:47 PM

I know this is a long shot, but does anybody out there know anything about doing a contract for deed? (Ya'll know everything else about money

) I just find out my tenants, who were plannning on buying, have basically no chance of qualifying for a loan. So, we're considering a CFD, but don't know anybody who has actually done one. Any experiences, good, bad, indifferent? I'm in MN, BTW, I know laws vary a lot by state.

cercis · #2 (**permalink**) 02-13-2006, 09:29 PM

check with a real estate attorney, some states have made them illegal.

Other than that, I'm getting ready to do a foreclosure on a contract for deed. In TX, foreclosure usually takes 45-60 days, a contract for deed foreclosure will take 55-70 days (not that much longer really). But it will require me to work harder, so the legal fees will be higher.

34saving · #3 (**permalink**) 02-14-2006, 05:15 AM

Wow. In TX you can foreclose in 45-60 days? In MN a "normal" bank foreclosure has a 6 month redemption period! (CFD's are 60 days)

cercis · #4 (**permalink**) 02-14-2006, 05:31 AM

Yes, isn't it amazing? And that 45-60 days can be from the first missed payment. Plus in TX we don't even need to wait until they've missed a payment, if they are behind in taxes or haven't provided proof of insurance, we can foreclose.

MN is a judicial state. This requires quite a few more steps and court oversight. TX is a nonjudicial state. We do 2 letters, a public notice of sale, and then the sale auction. It never goes in front of judge.

34saving · #5 (**permalink**) 02-14-2006, 06:03 AM

Wow. I'm not a lawyer, but from the research I've done, in MN the 6 month redemption period doesn't start until after the auction, which requires . . .a lot . . . Around here banks are usually the only ones to bid at the auction. . . . Cercis -- sounds like you work in the legal professions? Any idea how much it should cost to have a lawyer review the contract for deed if I write it up (from the pre-made forms)?

Fern · #6 (**permalink**) 02-14-2006, 12:47 PM

Have the tenants actually failed to make a rent payment yet?

cercis · #7 (**permalink**) 02-14-2006, 02:50 PM

Legal fees are going to depend on your area, etc. You can call around to ask. The firm I work for has set fees for almost everything. A half hour consultation will usually cost $50 (if they charge at all, that's something we're working on, my boss is 70 and gives away a lot of his time for free, which is great for him, but it is beginning to impact payroll).

Fern, I don't think her tenants will miss a payment, but it is a drawback to contract for deeds in Texas. I don't know about Minnesota, which is why I suggest consulting an attorney.

cercis · #8 (**permalink**) 02-14-2006, 02:52 PM

Oh, and you're right. In states with redemption periods, they start after the sale. Up until the time of sale you can usually get the mortgage companies to work with you, but they don't really have to.

34saving · #9 (**permalink**) 02-14-2006, 03:43 PM

They've been good tenants (which is the only reason we're considering a CFD.) We need to sell by November for the "capital gain exclusion/primary residence/ 2 of the last 5 years" thingie

Looks like my in-laws might be moving soon and the idea of having 2 houses on the market doesn't really appeal. However, the open market is certainly a possibility if necessary . . .