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My husband and I own a home that we are doing a "rent to own"

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with his brother. We do...
My husband and I own a home that we are doing a "rent to own" with his brother. We do have a contract stating how much monthly payments are and what total payments are, provisions, ect... It is slated to be paid for in 2020. My question is: would it be legal for my husband and I to borrow money against the house? We are in Mississippi.
Submitted: 1 year ago.Category: Real Estate Law
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5/18/2016
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
Loren
Loren, Lawyer
Category: Real Estate Law
Satisfied Customers: 35,014
Experience: 30 years of real estate practice experience.
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Good afternoon. I am Loren, a licensed attorney, and I look forward to assisting you.
Is title in your name? Does the contract allow a lien to be placed on the property? Would you be buying out the contract with the mortgage proceeds?
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Customer reply replied 1 year ago
the home is titled or deeded in our names. the contract does not specify anything about a lien, and there is no mortgage, we own the home outright, we want him to continue to live in the home and continue buying it....we would be using the loan for other things
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
Thank you for the additional information. Assuming you are contractually prohibited from placing any mortgage liens on the property before paying off the contract for deed, if you can find a lender to make such a loan to you, before you pay off the seller, it is not legally prohibited.
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Real Estate Lawyer: Loren, Lawyer replied 1 year ago
Are you still online with me?
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Real Estate Lawyer: Loren, Lawyer replied 1 year ago
should say "...not contractually prohibited..."
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Customer reply replied 1 year ago
I am sorry, I do not understand what you are saying. We are the owners, we are selling the home to someone else on a monthly note basis "rent to own agreement". WE want to borrow money against the house, we do not OWE any money on the property
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
I thought you were the buyer. If the contract does not prohibit and you pay it off when the deed is given to the buyer then you can mortgage the property.
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Customer reply replied 1 year ago
ok, so, for instance, we borrow money against it, and then--for some crazy reason--cant pay the loan back and the bank takes the house, would it be considered illegal that we did that since we have a contract giving him the right to own the home after he pays us xxx amount of dollars?
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
You would be in breach of the contract with the buyer if they made their payments and you could not convey the property to the buyers free and clear. They would be able to sue you for damages.
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Customer reply replied 1 year ago
ok, so he could sue us for the value of the home or whatever?
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
for the loss of the home that they paid for.
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Customer reply replied 1 year ago
ok, but if the buyer doesn't pay us, as outlined in contract, and we don't pay the loan back and loose the home he would have no recourse, correct?
Real Estate Lawyer: Loren, Lawyer replied 1 year ago
If the buyer breaches then they would not be able to enforce the contract with you. A party in breach is estopped from enforcing the contract they are breaching.
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Real Estate Lawyer: Loren, Lawyer replied 1 year ago
Are you still online with me?
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Real Estate Lawyer: Loren, Lawyer replied 1 year ago
If you have no further questions, and have not yet done so, please remember to leave a favorable rating (Excellent or Good) so that I am credited by JustAnswer for assisting you. A bonus is not required, but is always appreciated.
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Loren
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