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Ely
Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 86360
Experience:  Qualified attorney in private practice including business, family, criminal, and real estate issues.
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We are in the process of selling an approved building lot in

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We are in the process of selling an approved building lot in a residential area. What are the ADVANTAGES AND DISADVANTAGES of selling to someone who wants us to be the mortgage holder for payment of the said property over a period of THREE YEARS.
Submitted: 9 months ago.
Category: Real Estate Law
Expert:  Ely replied 9 months ago.
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

We will begin with advantages first, and then will go on to disadvantages.

ADVANTAGES
-You get the sale;
-This provides a steady (in theory) income and if they default and you foreclose, you can re-sell the land at auction.

DISADVANTAGES
-They can file for bankruptcy and then essentially diminish/void any outstanding balance and possibly the amount owed;
-They can constantly be late on payments, prompting you to remind them, costing you time and emotional worry;
-Unless you prohibit this in the contract, they can sell their interest to someone else.

Frankly, many of such deals end up falling apart because if the party not taking you seriously because you not not an "official" lender and may constantly be late, and/or possibly disregard your threats at foreclosure, etc. It is imperative to trust the individual, because otherwise it can end up being a very frustrating relationship.

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Customer: replied 9 months ago.


Could we as the mortgage holders be responsible for any leins or debts attached to the property by the buyers failing to pay others? Could we be liable for anyone injured on the property while holding the mortgage?

Expert:  Ely replied 9 months ago.
J,

Could we as the mortgage holders be responsible for any leins or debts attached to the property by the buyers failing to pay others?

Not quite. However, another entity may be able to force the property into foreclosure for non-payment. If so, you'd stand as FIRST MORTGAGE (provided everything is filed and recorded properly at time of sale) and get anything that the auction brings in to satisfy your mortgage, and only then will the other entity be able to get anything (if there is anything left).

Could we be liable for anyone injured on the property while holding the mortgage?

Generally speaking, no.

Gentle Reminder: Please use the REPLY button to keep chatting, or RATE and submit your rating when we are finished.
Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 86360
Experience: Qualified attorney in private practice including business, family, criminal, and real estate issues.
Ely and 4 other Real Estate Law Specialists are ready to help you
Expert:  Ely replied 9 months ago.
Thank you for your gratuity.

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