Facts about the owner financing contract PDF template
- 1 Facts about the owner financing contract PDF template
- 2 Why is the Owner Financing Contract PDF used?
- 3 Who Would Use the Owner Financing Contract PDF?
- 4 When Should You Use The Owner Financing Contract PDF?
- 5 What are the Consequences for not Using a Owner Financing Contract PDF?
- 6 Steps for Filling Out a Owner Financing Contract PDF Form
- 7 Quick Questions
Why is the Owner Financing Contract PDF used?
The owner financing contract is used to define the terms and agreement a seller and buyer have come to. Without the contract, issues could arise later that could have been quickly resolved with a written deal. Often, there is a simple misunderstanding that could have been clarified in a written contract. Some of the areas an owner financing cover are:
- Payment schedule
- Amount of payment
- Length of agreement
- Item being sold
- Late payment penalties and exactly when the payment is considered late
- Will the property be covered under a warranty or guarantee or is it sold “as is”
- Will there be a balloon payment or will the payments ever increase
- What will take place if the payments are not made
- Legal names of the parties involved
Other areas it can cover are what extra products or things come with the sale. Buyers and sellers sign contracts so that both parties get protection and have rights if one side fails to uphold their end of the deal. It is a way to make negotiations simpler, well defined, and easy to understand.
Who Would Use the Owner Financing Contract PDF?
An owner financed contract can be used by two individual people or groups of people selling their property, such as a husband and wife selling to a brother and sister. Other entities that can enter into the agreement are trusts, but make sure to verify who can legally sign for the trust. If a trust is entering into the contract, Legalzoom recommends having the verbiage as trustee after the person or persons names as shown in the first signature line of this document. It may be that there is only one person that has to sign for the trust, but there might be two or more people that must sign for the trust.
The contracts can be used to sell to a person or group that does not meet standard lending conditions. For example, a buyer may have gone through a recent bankruptcy or foreclosure but still has the income to make a monthly payment. The two parties are free to use the contract and come up with their own terms and conditions, but the seller will want to make sure the buyer has the means to make the payment states LegalWiz.
When Should You Use The Owner Financing Contract PDF?
This document should be used when the current owner is going to relinquish property over to someone else without full or immediate compensation. The buyer may put some money down, no money down, or trade work or other items as part of the deal. All parties document the deal in the contract. For example, a seller may agree to sell a buyer a property, but the buyer has no cash to put down on the deal, but the seller is fine with that because the buyer is going to do remove the debris off the property in the first month at no cost to the seller. The seller believes it to be a fair agreement because he does not have to pay for or figure out how to get the debris removed, and the buyer gets to come into the deal with no money down. Situations such as this call for written agreements to keep all of the arrangements in place.
What are the Consequences for not Using a Owner Financing Contract PDF?
Dealing with disagreements after a sale can be extremely difficult without a written document to refer back to. Without a written contract it can be costly to try an prove what the original agreement was. The buyer or seller may have to hire legal counsel or spend hours of time at court trying to explain to the judge what happened. The University of Mexico Judicial Education Center states that in order to prove a breach of contract some of the evidence needed will be:
- A signed contract
- The date the contract was breached
- Were there any modifications to the contract
If there is no written documentation, the courts will have to decide if there really was a deal in place. If the courts deem there was an agreement without a contract, the courts determine what the damages are and how much the damaged party will be compensated.
Steps for Filling Out a Owner Financing Contract PDF Form
Some of the information you will need to know are:
- Date the agreement is to begin
- Date the agreement is to end
- Description of the item being sold
- Legal names of the buyer and seller
- Payment information
- Interest on the loan, if any
- Date the payments are due
- Late payment penalties
- Down payment, if any, and the amount
There are many details in any owner financing arrangement, and each situation is unique to what item or property each side negotiates into the deal.