DEAR BOB: If I sell my rental house to my tenant and carryback a mortgage for my buyer, what happens if the buyer-tenant goes bankrupt?Is there any way I could lose my right of foreclosure to some other creditor?–Bill K.
DEAR BILL: No. Your seller-carryback mortgage (or deed oftrust) should be secured by the rental house you sell to your tenant. If yourbuyer files Chapter 7 or Chapter 11 bankruptcy, you remain a secured creditorbecause your mortgage (or deed of trust) is recorded against the house’s title.
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Nobody can get ahead of you in priority (except the localproperty tax collector who always has top priority for unpaid property taxes).You might have to wait to get paid, but you have the mortgage security recordedagainst the property you sold to the tenant.
The best thing that could happen to you (but probably won’t)is: you have to foreclose; no bidders show up at the foreclosure auction; andyou get the property back to sell again for a second profit. That happened tome only once, but it was very profitable. For details, please consult a localreal estate attorney.
IS A 5 PERCENT SALES COMMISSION TOO HIGH FOR LAND SALE?
DEAR BOB: I own five acres zoned for up to six houses peracre in a fast-growing area. A real estate agent wants a 5 percent salescommission and a six-month listing with six more months of commission if I sellafter that. Isn’t 5 percent a lot considering this is a small property?–Jean-Claude B.
DEAR JEAN-CLAUDE: No. A 5 percent sales commission for avacant land sale is quite reasonable. The customary sales commission for landsales is up to 10 percent of the gross sales price. Sales commissions arenegotiable. Selling vacant land isn’t as easy as selling a house.
A six-month listing term is fair for vacant land. However,that “savings clause” of 180 days after the listing expires shouldapply only to prospects that the listing agent registers with you during thelisting term. Be sure it doesn’t apply to any sale you make on your own tosomebody who was not introduced to the land by the listing agent or acooperating buyer’s agent.
HOW TO ENFORCE A JUDGMENT OUT OF STATE
DEAR BOB: I bought a Florida house direct from the seller.No agent. Part of the well equipment was rented. But the seller told me heowned it. I took the seller to Florida court and won a judgment against himwithout using a lawyer. But the seller has now moved to Georgia. I contacted aGeorgia lawyer who tells me it would cost more for his services than thejudgment is worth. Do I just have to forget about collecting this Floridajudgment? –Joan O.
DEAR JOAN: If you have a large judgment, and if the sellerowns any other Florida real estate, it may be worthwhile recording yourjudgment in the counties where he owns real property. When he eventually sellssuch Florida property, then your judgment must be paid to deliver marketabletitle.
Or, you can take your judgment to Georgia and have a Georgiaattorney enter it in the court records where your seller now lives. Under theFull Faith and Credit clause of the U.S. Constitution, your Florida judgmentcan then be recorded as a Georgia judgment. When the seller goes to sell hisGeorgia property, then your Florida judgment must be paid in full if it isrecorded in the county where that property is located. For details, pleaseconsult a Georgia attorney.
The new Robert Bruss special report, “How to Sell YourHome for Top Dollar in a Buyer’s Market,” is now available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News