Contracts for Deed as a Selling Option
I will be on air with the Real Estate Radio Hour on Saturday, February 5, to talk about the use of contracts for deed as a selling option. You can listen to the interview here.
Contracts for deed are an excellent mechanism for buying and selling real estate in the right circumstances. To have a successful contract for deed transaction, you need a seller who is able to finance the sale and a buyer who can make the payments. If there is a mortgage on the property, most often you also need a lender’s permission to sell the property via a contract for deed.
That permission is not, however, always forthcoming, and thus contracts for deed have not been able to play as much of a role in bringing the housing market back as they could have, as cautious sellers do not want to risk their lender calling their loan for a violation of their due-on-sale clause. Nonetheless, with credit markets still tight (especially for real estate acquisition), a contract for deed is an ideal structure for the sale of an unencumbered property to a buyer who has income but cannot obtain financing.
In Minnesota, contracts for deed are made all the more simpler because of the existence of a uniform contract for deed form. Still, consultation with an attorney before entering into the contract for deed is strongly recommended.