Downside to land-contract real estate purchase

DEAR BOB: About three years ago, we bought the house we wererenting. We didn’t get the deed because we agreed to buy on an installment landcontract. Our credit wasn’t good at the time and we didn’t have down-paymentcash so we were satisfied. We have made all the payments to the seller on time.My wife recently came into an inheritance, which will enable us to pay off theseller’s land contract and obtain the title. However, he has now encumbered theproperty with a mortgage for more than our purchase price. He admitted heshouldn’t have done this but he didn’t expect us to pay off the land contract sosoon. He doesn’t have the approximate $12,000 extra cash to pay off all hisdebt secured by our house. What should we do? –Bryan H.

DEAR BRYAN: Please consult a local real estate attorney.Your situation shows why installment land contracts can be so dangerous,especially for buyers when sellers can’t deliver marketable title.

Purchase Bob Bruss reports online.

Perhaps the seller has other assets he can sell to raise the$12,000 cash to pay off the mortgages, which exceed your land-contract purchaseprice.

One way or another you are entitled to obtain marketabletitle at the purchase price specified on your land contract for sale.Unfortunately, your situation occurs far too frequently when aland-contract-sale seller can’t deliver marketable title to the buyer.

MANUFACTURED HOMES ARE ELIGIBLE FOR REVERSE MORTGAGES

DEAR BOB: I applied for a reverse mortgage but was refusedbecause I own a manufactured home in a condominium community. I own the landunder my house. I have the deed. Can you tell me why I was refused? –Maggie H.

DEAR MAGGIE: Just because you own a manufactured home is notthe reason your reverse-mortgage application was denied. I presume you are 62or older.

However, you say it is in a “condominiumcommunity.” That has me puzzled.

If you are subject to a homeowner’s association, which ownsthe common areas of the development, but you own the land under yourmanufactured home, you should be eligible for a reverse mortgage. I suggest youcontact the reverse-mortgage originator to find out more details.

HOW TO GIVE VACANT LAND TO A CHARITY

DEAR BOB: My wife and I have owned a residential lot inColorado City, Colo., since 1968. We had it appraised and were informed it willbe difficult to sell because of the abundance of lots for sale just like ours.It is free and clear with the property taxes paid. We were unsuccessful in ourattempt to donate it to a local church and an organization, which builds homesfor the needy. Is there any other way to divest ourselves of this lot? –WillG.

DEAR WILL: I presume the organization you refer to isHabitat for Humanity. They are a wonderful organization, which I highlyrecommend. If Habitat rejected your generous donation, there must be a problemwith your lot or perhaps they have no need for it.

In most communities, the Salvation Army will accept realestate donations if the lot has any sales value. Keep trying.

The new Robert Bruss special report, “Five Easy Ways toBuy Your Home and Investment Property for Nothing Down,” is now availablefor $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit cardat 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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