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Ask Barrister Your Own Question
Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 33786
Experience:  15 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs
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I purchased a home on contract the price was 120,000 I

Customer Question

I purchased a home on contract for deed the price was 120,000 I agreed to put 20,000 down I also agreed to pay 3.5 interest which was agreed to be paid monthly until I paid the balance. Anxious to pay the house off instead of just paying interest each
month I was paying $2000 month to reduce the principle. My company was experiencing some cash flow issues due to a large job that we accepted. I decided to wait until the job was completed to pay more principle on the home. When the home owner did'nt get a
$2000 payment she became very upset and decided to legal action upon re reading the contract she realized that a monthly payment was not stated in the contract and she claims she did not sign or agree to interest only. She claims the contract is void and she
is trying to get the home back. I have over$30,000 invested not including the fact that the home was her fathers estate and it was full of furniture and clutter. I spent $5300.00 emptying and having it cleaning. I also filled a 28 ft trailer half full and
delivered a list of items she wanted which cost me quite a bit in fuel hauling it 1400 miles from AZ to Iowa. I am not in a position to pay it off or get a mortgage that is why I wanted a contract to deed. Now I will have to pay an attorney money that could
be used to pay for the home. What do you suggest?
Submitted: 1 year ago.
Category: Legal
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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Did she sign the contract for deed as the seller?

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Does it specifically state that it is only interest that is due each month based on th 3.5% annual interest rate?

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And there is no set due date on the contract as to when you have to have it paid by?

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thanks

Barrister

Customer: replied 1 year ago.
Hello I am the buyer and yes the seller and myself both signed the contract on March 1st 2015. The 1st of each month I was to pay the 3.5% interest and there was no pay off date.
Customer: replied 1 year ago.
The contract states interest only
Expert:  Barrister replied 1 year ago.

Ok, the problem here is that if there is no set date for when the contract will come due and no amount of principle that is due under the contract, that makes this a "demand note". This means that the seller can call the debt in at any time and if you can't pay it off, they could consider it in default and then attempt to foreclose.

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So having an actual due date for a final payoff protects the buyer from having a demand note that can be called in at any time.

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She is wrong that it is void, it is just "callable". But if you weren't able to borrow money to refinance or pay the debt off, then a judge would likely declare you the equitable owner and order that the property be sold with the proceeds first going towards paying off the seller and any balance going to you.

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Unfortunately the part about you moving personal property isn't really relevant to the contract for deed and doesn't affect it legally.

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thanks

Barrister